Research On Financial Fraud And Auditing Strategy Of Companies Listed On The New Over The Counter Market

As an important part of China's capital market,the New OTC(Over the Counter)Market is an important platform for our country's SMEs to conduct financing and equity transactions.In recent years,the market scale of the New OTC Market has continued to expand and its influence has soared.Since the outbreak of the first audit failure of the New OTC Market in 2015--the financial fraud case of the Senxianyuan,more and more companies listed on New OTC Market have been exposed to financial fraud or violations.According to the illegal statistics of eastmoney.com,there were 1970 violation penalties in the New OTC Market in 2019,an increase of45.5% compared with 1,354 in 2018.The incident of financial fraud will have a serious impact on the market.If this is not paid enough attention,it will seriously affect the investor's confidence in the New OTC Market,and result in the lack of financing for SMEs in urgent need of funds.If enterprises in New OTC Market successfully turn board through financial fraud,this will bring serious potential risks to the capital market and will affect the healthy development of China's capital market.Therefore,in view of the financial fraud of the companies listed in the New OTC Market,only timely prevention and control can create good conditions for the healthy development of China's capital market.This article first uses the literature research method to sort out the existing domestic and foreign literature on financial fraud and audit of the New Third Board.It defines the concepts of listed companies on the New OTC Market,financial fraud,and audit strategy,and introduces the theory of fraud motivation and modern riskoriented audit theory.All these have laid the theoretical foundation for the full text.Next,this article studies the New OTC Market,understands the development process of the New OTC Market,compares the relevant regulations of the New OTC Market with the main board,SME board,and GEM board,and concludes that the listed company has a smaller size,imperfect internal control,and higher operational risks.From this,it is found that the New OTC Market audit has the characteristics of low fees,large workload,high audit risk,and difficult work.Then,the descriptive research method was used to classify and count the financial fraud methods of all listed companies punished for financial fraud in New OTC Market,and the commonly used fraud methods of listed companies in New OTC Market were obtained.This article uses case analysis to analyze the case of REANDA Audit Yindu Culture Media.Yindu Culture Media engages in financial fraud by means of artificially increasing income,falsely recording the relationship of related parties,concealing the funds occupied by related parties,and concealing external guarantees.The author uses GONE theory to analyze the fraudulent motives of Yindu Culture Media,and finds that Yindu Culture Media has actual controllers occupying company funds to extract profits,there is a major flaw in the "one share dominant" internal control,and the accounting firm has not been diligent,which reduce the likelihood of financial fraud exposure.These circumstances directly prompted Yindu Culture Media to eventually engage in financial fraud.In the audit process of Yindu Culture Media,REANDA did not identify the risk of fraud in Yindu Culture Media,and the specific audit procedures were not implemented properly,which caused REANDA to issue inappropriate audit opinions.On this basis,the author proposes an improved analysis of REANDA's audit strategy.Combined with the previous analysis of the characteristics of company in the New OTC Market,the audit features of the New OTC Market,and the commonly used fraud methods of New OTC Market,we put forward policy recommendations on the financial fraud and audit of the listed company in New OTC Market from the level of the listed company,accounting firm and regulation.