How it works

At Transparently, We’ve Reimagined Financial Analysis

We changed the game with AI

Detecting accounting fraud and manipulation is almost impossible with traditional tools and processes. Using the powers of cutting-edge AI, the Transparently Risk Engine can accurately predict the joint probability that a company is manipulating its accounting and the likelihood that it may collapse as a consequence.

Our system provides real, actionable insights: Ratings, Risk Scores and detailed company reports to inform investment strategies, risk management and financial crime prevention.

the #1 question

How does the Transparently Risk Engine work?

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Applies 200 financial models to analyze companies

We replicated the analytical behaviors of forensic accountants, activist short sellers, credit analysts, equity analysts, auditors and academics into 200 financial models.

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Employs cutting-edge AI trained on millions of inputs

We use the latest AI techniques to train our models on decades' worth of data across 85,000 companies, detecting complex patterns of manipulation.

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Generates fully explainable
risk metrics

The Engine generates Risk Scores and Ratings and provides a detailed explanation of detected red flags, consolidating across 14 clusters of characteristics to guide analysis.

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Tested rigorously for accuracy

We constantly test our results, demonstrating impressive accuracy and virtually zero false positives.

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Updates daily with new inputs

We update the Risk Engine with data daily to identify the newest and latest patterns of manipulation.

The result?

An entirely dynamic AI system that can accurately predict collapse in over 90% of companies that ultimately fall apart, three years before they do so.

By contrast, traditional methods only get it right half the time at best.

Transparently Rating and Risk Score

Our Transparently Ratings give an indication of the overall accounting health of a company. They are derived from the Transparently Risk Scores, and how those lie relative to the sector and market.

The Transparently Risk Score (0-100%) represents the joint probability that a company is manipulating its numbers and the likelihood of collapse as a consequence. Our research evidences substantial predictive power for both corporate collapse and shorter-term security returns.

OVERVIEW

Accounting Risk Clusters

We group our Engine’s most granular findings into 14 clusters of characteristics, with deeper information available in our detailed forensic reports.

Accruals Management
Accruals Management

We look into anomalies in the management and treatment of accruals that can indicate manipulation.
Asset Quality
Asset Quality
We look into the treatment of assets, types of assets and structures that may indicate manipulation.
Business Manipulation
Business Manipulation
We look into actions taken during the financial year in an attempt to engineer outcomes in the accounts. Examples include manipulation of production levels, inventories, and R&D.
Cash Quality
Cash Quality
We look into signals regarding whether cash generation is robust, potential for faking of cash and more.
Credit
Credit
We look into credit characteristics that can indicate firm stress, which is strongly correlated with manipulation.
Corporate Governance
Corporate Governance
We assess a range of governance indicators that signal issues with the actions of management, insiders and more.
Gearing
Gearing
We look into gearing characteristics that can indicate issues with manipulation. Unusually high or low gearing can indicate firm stress.
Growth Signals
Growth Signals
We look into both unusually high growth rates and unusually low growth rates. Either can indicate issues with manipulation risk.
Income Quality
Income Quality
There are often many forms of income recorded by a company. Some of those are higher quality than others and unusual patterns in these can signal higher manipulation risk.
Investing Activity
Investing Activity
We look into both unusually high or low levels of investment. Either can indicate issues with manipulation risk.
Margin Signals
Margin Signals
We look into anomalous patterns in margins that can suggest manipulation.
Smoothing Activity
Smoothing Activity
We look for manipulative techniques that mask accounting volatility and reduce perceived risk.
Valuation Signals
Valuation Signals
We investigate risks implied by market pricing. Valuations (high or low) can create strong incentives for a company to manipulate, especially when combined with other sources of stress.
Working Capital Signals
Working Capital Signals
We look into unusual patterns in the management of a company’s current assets and liabilities.

Want to learn more about our system?

Discover how our AI solution expedites fraud risk assessments and accurately predicts corporate collapse.

Read our white paper

Transparently Manipulation Risk Engine

Dr. Hamish Macalister

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