A Research On Identifying Financial Fraud Based On Investors' Point Of View

In recent years,with the public's consciousness of investment strengthening gradually,it makes the capital market in our country activate all the time.Investors concern the choice whether the listed companies has investment value most.Standing in the point of investors,how to identify whether listed companies issued fraudulent financial reports becomes the focus of this paper.The paper will build a financial reporting fraud analysis framework,and chooses Shanghai Kangda New Materials Co.,Ltd.(Hereinafter referred to as "Kangda new materials")as a research case that it can demonstrate to investors how to use this framework to analyze a listed companies existed fraud problem.The paper mainly consists of four parts.Firstly,it expatiates the research background and significance of the topic,and introduces the general situation of the case company Kangda New Material,then,it combs the domestic and foreign theories and documents of financial reporting fraud,which are summarized from fraud motivations,fraud characters,and fraud methods.Secondly,the paper defines the relevant concepts of financial reporting fraud,and introduces the methods of financial reporting fraud.It uses the theory of risk-oriented audit and Harvard analysis framework,and then constructs the analysis framework for identifying the financial reporting fraud.Thirdly,the paper analyzes the risk of fraud in the financial statements from four aspects: industry environment,the nature of the company,the company's competitive strategy,business risk,and the company's performance measurement,to analyze the potential motivations for the fraud.Finally,the paper makes an analysis of the fraud risk of Kangda New Material.The fraud identification is carried out through the four aspects of profit quality,asset quality,liabilities,shareholders' equity and cash flow.