A Case Study On Financial Fraud Of Dandong Xintai Electric Co.,Ltd.

With the rapid development of China's economy,Chinese listed companies are blossomed everywhere on the ground of China like bamboo shoots after a spring rain.The number of listed companies is large,but the quality is uneven.And financial fraud is often exposed through a variety of media.The operating efficiency of an enterprise affects not only the stakeholders but also the important operation of the whole market economy in China.Because the listed companies are directly involved in the operation of the stock market,the authenticity and reliability of the financial information provided by them are more important.On the one hand,the financial fraud behavior of listed companies affects the macroeconomic regulation and controls policy of the state,on the other hand,it greatly damages the interests of investors.And for the company itself,financial fraud only bring short-term benefits for it.In the long run,financial fraud is not only detrimental to the healthy development of the company,but also would lay a huge hidden danger for its development.Therefore,exploring the means and causes of financial fraud of listedcompanies can better grasp the possibility of financial fraud of listed companies,at the same time nip in the bud and it would produce great practical significance.The subject investigated of this paper is Xintai Electric Company.The fraud listing and financial fraud events of Xintai Electric Company are typical and representative.Xintai Electric has used false data to conduct financial fraud in the IPO application and there are false records and major omissions in the regular financial reports disclosed after the listing of the gem.In November 27,2015 Xintai Electric released an announcement,the company admitted its financial fraud behavior.From2011 to 2014,every period of the financial report has a false structure for the account receivable repurchase,and the amount is huge.We can carry out financial fraud from the fraud triangle theory,internal control theory and corporate governance theory to analyze the company's means and explores the reasons of financial fraud for striving to real,detailed and thorough.This paper consists of six parts.The first part is an introduction,which mainly describes the research background and significance,research methods and content.The second part is the literature review and related theories.There are the connotation of financial fraud,and the related theories concerning this paper analysis of the causes of financial fraud Xintai Electric Company,including the fraud triangle theory,internal control theory and the theory of corporate governance.The third part is the general situation of Xintai Electric Company's financial fraud case,including the introduction of Xintai Electric Company,the financial fraud case's process and Xintai Electric's means of financial fraud.The fourth part,starting from the theory of fraud triangle,internal control theory,corporate governance theory,deeply explored the reasons for the unexpected choice of financial fraud by Xintai Electric Company.The fifth part puts forward some suggestions to prevent the financial fraud of the listed companies.The sixth part is the conclusion.After exploring,the reasons for Xintai Electric's financial fraud can be summarized from the following three aspects.From the Triangle Theory,corporate management faces companies listing,avoiding delisting and pressure from the government.In addition,the imperfect internal supervision system of the company provides an opportunity for the relevant personnel to carry out financial fraud.Finally,there is a distortion of management values.From the Internal Control,lacking of control environment,omission of basic work in risk assessment,non-standard control activities,unsmooth exchange of information and communication,and lacking of relevant supervision are all reasons for financial fraud.From the Corporate Governance,the lack of functions of the board of directors and board of supervisors and the irrational ownership structure provide opportunities for the occurrence of financial fraud.The immaturity of the external environment further promotes the management to make financial fraud decisions.In view of the reasons of Xintai electrical financial fraud,this paper puts forward corresponding suggestions to prevent financial fraud of listed companies.First of all,the company should formulate a correct and reasonable development strategy.It is also necessary to enhance the supervision role of the regulatory authorities,to improve the moral quality of employees and to reduce the pressure,opportunities and excuses of financial fraud.Then,the company should start from all aspects of internal control five elements,strengthening the construction of internal control environment,improving the awareness and level of risk assessment,improving the efficiency andeffectiveness of control activities,improving information exchange and communication and enhancing internal supervision and external audit.Finally,the company should establish a reasonable ownership structure,making full use of the supervisory function of the board of directors and board of supervisors,and making corresponding contributions to the improvement of the control market and the manager market in China.The prevention of financial fraud of listed companies brook no delay,at the same time,it also requires each of us as a member of the public,actively participate in the supervision of the healthy development of the market economy in our country,and create a healthy investment environment together.