Analyzing a Listed Firm in Ghana for Early Warning Signs of Bankruptcy and Financial Statement Fraud: An Empirical Investigation of AngloGold Ashanti

Abstract

This research moves beyond traditional ratio analysis to find out the possibility of bankruptcy and financial statement fraud at AngloGold Ashanti (AGA). An examination of the financial statements of the company for the years 2010 to 2012 was made with the use of Modified Altman and Beneish models. The modified Altman model is a predictor of bankruptcy. To discover the possibility of financial statement fraud, this research used the Beneish model. The examination of AGA’s financial reports with the Beneish model revealed the company was not engaged in financial statement fraud. The Altman model on the other hand, brought to the fore the financial distress the firm went through in the years under review.

Keywords: Altman Z Score, Beneish M-Score, Fraud, Bankruptcy, Internal Control Systems