Beneish values

Regarding Beneish values, most the the components > 1 means theres potential for earnings manipulation. However, the two variables LEVI and SGAI start as negative coefficients… Does it still hold if the value is greater than one means earnings manipulation, or does a value close to zero mean potential manipulation?

These two are negative because is assumed there is a normally decrease from previous to current period in its ratio. For other ratios is assumed that by doing regular business activities, most of them will grow. If they increase too much or too less from one period to another, it might be a potential manipulation due to this test. However, this is just one of quick tests for red flags only. Further diligence is required for any conclusion. There are forensic tools software on market with many tests included in analysis. If most of the taken tests led to similar conclusion and an analyst is able to find proofs for manipulation, he probably did the job.