Methodology on building an integral indicator for evaluating probability of financial reporting manipulation towards inflating financial performance, incorporating type of financial activity of corporations

The article examines financial reporting manipulation. In the presence of unstable condition of Russian economy, there is a high risk that financial stakeholders are prone to making decisions based on inaccurate data contained in financial reporting that was purposefully distorted. An applicability analysis of using functioning western models for evaluating probability of financial reporting manipulation points towards their limited effectiveness based on multiple reasons. Currently, it is necessary to continue investigation on building methodology for evaluating degree of financial reporting manipulation, which will assist in increasing credibility of audit reports. A new approach needs to be developed that would help incorporate Russian intricacies of conducting business, Russian accounting principles, dynamic transformation and strong determinism of indicators that are a part of western models. One of the promising branches in the research of credibility of financial reporting is building a functioning probability model and specifically, an integral indicator of financial reporting manipulation. To address this task, it is proposed to use the methodology of evaluating distortion of financial reporting, based on consequential utilization of mathematical and statistical models (typology, clusterization, multiple criteria evaluation) A new model needs to point out both the presence of distortion, as well as direction of those distortion.