Beyond Expectations: Anomalies in Financial Statements and Their Application in Modelling

Roman Blazek () and Lucia Duricova
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Roman Blazek: Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitna 1, 010 26 Zilina, Slovakia
Lucia Duricova: Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitna 1, 010 26 Zilina, Slovakia

Stats, 2025, vol. 8, issue 3, 1-30

Abstract: The increasing complexity of financial reporting has enabled the implementation of innovative accounting practices that often obscure a company’s actual performance. This project seeks to uncover manipulative behaviours by constructing an anomaly detection model that utilises unsupervised machine learning techniques. We examined a dataset of 149,566 Slovak firms from 2016 to 2023, which included 12 financial parameters. Utilising TwoSteps and K-means clustering in IBM SPSS, we discerned patterns of normative financial activity and computed an abnormality index for each firm. Entities with the most significant deviation from cluster centroids were identified as suspicious. The model attained a silhouette score of 1.0, signifying outstanding clustering quality. We discovered a total of 231 anomalous firms, predominantly concentrated in sectors C (32.47%), G (13.42%), and L (7.36%). Our research indicates that anomaly-based models can markedly enhance the precision of fraud detection, especially in scenarios with scarce labelled data. The model integrates intricate data processing and delivers an exhaustive study of the regional and sectoral distribution of anomalies, thereby increasing its relevance in practical applications.

Keywords: anomaly index; creative accounting; centroids; unsupervised learning (search for similar items in EconPapers)
JEL-codes: C1 C10 C11 C14 C15 C16 (search for similar items in EconPapers)
Date: 2025
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