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Rationale

The integrity of corporations, both quoted and unquoted, is now under close scrutiny. A series of major corporate collapses, failed audits and outright fraud has undermined confidence.

  • Companies are not held to account, investment research is often conflicted, and audited financial statements are frequently disconnected from commercial realities, and opaque.

Fintegrity Analytics has analysed all major corporate failures over the last 20 years.

  • In many cases, the 'writing was on the wall' well before the event. Failures could have been foreseen via forensic examination of key financial statements, coupled with analysis of potential internal control failings arising from inadequate corporate governance.

  • There is a familiar pattern to most corporate failures - when key metrics do not correspond with industry and competitor norms, this is usually indicative of potential future problems.

  • UK accounting requires a significant element of estimation and judgement, but auditors are often unquestioning. Fintegrity Analytics strips away the veneer and applies common sense analysis to produce a predictive interpretation.

The Integrity Risk Rating is an amalgamation of the key metrics which are relevant to identifying potential future corporate failures.

 

The Integrity Risk Rating has been backtested to demonstrate its reliability.