The importance of corporate governance on prevention of fraudulent financial reporting-a reserach

This dissertation is prepared for examining fraud concept which becomes a major problem and main reason behind well-known global financial crises. Main intention of this dissertation is to explain the relationship between fraudulent financial reporting, which is one of the types of fraud, and corporate governance practices with a research, to inform regarding the results of the research and to make suggestions about the topic. Firstly; before the explanation of fraud concept, the accounting and audit concepts are defined and information regarding the relationship between these concepts is given. Following that information, the definition of fraud is done in detail and the main reasons behind fraud perpetration are presented with "Fraud Triangle" which is prepared by ACFE. Furthermore; cost of fraud is shown, characteristics of a fraud perpetrator are described and then types of fraud and fraudulent financial reporting are explained. The information regarding what corporate governance means, corporate governance principles, corporate governance systems, corporate governance mechanisms that play an important role on prevention of fraudulent financial reporting, developments regarding corporate governance in Turkey and Corporate Governance Index (BIST XKURY) which is a further corporate governance practice in our country are presented on 2nd Chapter. Independent auditors apply audit procedures and provide audit evidences to be able to reveal fraudulent financial reporting risk by treating with utmost professional skepticism. Ratio analysis is one of those procedures. This research is conducted by ratio analysis and to understand whether statistical significance exists between XKURY companies and Non-XKURY companies, which are listed in Borsa İstanbul and under production sector, in terms of audit evidence should be obtained. Keywords: fraud, fraudulent financial reporting, corporate governance, Corporate Governance Index (BIST XKURY), audit, audit evidence