The Case Research On The Financial Fraud Of GY Corporation

With the development of China, the stock market plays an indispensable role in the capital economy. Not only has the stock market contributed to the economic development,but also provides the listed companies capital support, especially the emergence of the GEM has brought new hope to SMES. However, it was followed by continuous exposure of the financial fraud of listed companies. Each year, dozens of listed company receive administrative penalties by CSRC because of the financial fraud, but these are investigated and dealt with fraud is only a small part of the company, there is still a lot of listed companies to escape regulators punish. The financial fraud of listed companies not only existed in China's stock market, but also has become a major problem in the global economy in recent years. Listed companies disclosed financial information to be true for their own profit. It will seriously weaken the accounting functions and cause serious damage to stakeholders, finally also can create the social faith crisis and disrupting the order of the Socialist market economy. Therefore, financial fraud is beyond the financial area and evolved into people's social problems.This paper takes GY's financial fraud as the object of research. As one of the first 28 listed companies on the GEM, GY has maintained a good momentum of development.However, since the company has investigated by the Commission in 2015, financial fraud has been exposed continually, which causes the attention of the market and the majority of investors. This paper analyzes the financial fraud events of GY Company, identifies the fraudulent means in the process, analyzes the causes of fraud and points out the feasibility suggestions from the angle of internal control.The paper takes a financial fraud research on GY corporation by using case study method which based on the analysis and integration of GY's financial statements, internal control forensic reports and other relevant information. The reason was found by analyzing financial fraud of GY, which include the people, the system and the department,specifically including decision-making is driven by interests, the inappropriate behavior of the chairmen, being short of independence of financial staffs, the imperfection of accounting control system and the lack of internal supervision. According to the actual situation of GY, it is suggested that GY company should implement the training system and punishment system to implement the company's moral and cultural construction,strengthen the internal control system and the accounting control system of prepaid account links, procurement links, capital management aspects, hire experts from various fields to serve as independent directors, improve the oversight function of internal audit by strengthening the independence and risk management of internal auditing and improving the overall quality of auditors, improve the supervision function of the board of supervisors to have collective effect by improving accounting control system and internal supervision. In addition, we also hope that this article can provide a warning for the listed companies and learn from the role to prevent similar incidents from happening again for the majority of investors to provide a green and healthy securities market.