Auditors check all the companies included in the sample. All public limited companies socie Âte Âs anonymes ) and limited liability companies are obliged to submit to an auditor's control when they fulfil two of the three following criteria: 1 total revenues are over 1 billion Greek Drachmas GRD) $2,717 million, £1,852 million); 2 total assets are over 500 million GRD $1.359 million, £926,000); and 3 the average number of employees is over 50 Ballas, 1994; Caramanis, 1997). Some of the characteristics of the full sample companies are presented in Table I. There is a statistically significant difference between average profits of FFS firms, with losses averaging at 368 million GRD $1 million, £680,000), and non-FFS companies averaging a profit of 895 million [ 183 ] Charalambos T. Spathis Detecting false financial statements using published data: some evidence from Greece Managerial Auditing Journal 17/4  179±191 Downloaded by Dublin Institute of Technology At 02:41 09 October 2015 (PT)
GRD $2.432 million, £1.657 million) t 2 : 547, p < 0 : 000). Similarly a significant difference can be observed in average working capital between FFS firms with 369 million GRD $1.003 million, £683,000), and non-FFS firms with 2,281 million GRD $6.198 million, £4.224 million) t 2 : 457, p < 0 : 05). Mean equity also gives a statistically significant difference between FFS firms and non-FFS firms with 2,474 million GRD $6.723 million, £4.581 million), and 6,206 million GRD respectively $16.864 million, £11.492 million) t 1 : 686, p < 0 : 010). With regard to inventories, although mean value for FFS firms is 1,036 million GRD $2.815 million, £1.918 million), and 1,859 million GRD $5.051 million, £3.442 million) for non-FFS firms, the difference is not statistically significant t 1 : 420, p < 0 : 160). Variables The variables in this study come from many sources. To find variables, prior work on the topic of FFS was carefully considered. Such work as that of Green and Choi 1997), Hoffman 1997), Hollman and Patton 1997), Zimbelman 1997), Beasley 1996), Bologna et al. 1996), Arens and Loebbecke 1994), Bell et al. 1993), Schilit 1993), Davia et al. 1992), Green 1991), Stice 1991), Loebbecke et al. 1989), Palmrose 1987), and Albrecht and Romney 1986) contained suggested indicators of FFS. Initially, a set of 17 financial ratios was formed. However, to avoid ratios providing the same information due to high correlations, it was decided to exclude highly correlated ratios, while retaining ratios describing all aspects of financial performance, including profitability, solvency/liquidity and managerial performance Courtis, 1978). Except for the correlation analysis, the statistical significance of the financial ratios was also considered through t -tests. This combination of correlation analysis and t - tests led to the selection of a limited set of ten financial ratios, which provide meaningful and non-overlapping information as much as possible). The selected ratios for FFS detection are discussed below. There is a relationship between a company's choice of accounting valuation methods and type of depreciation with FFS.
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