A Case Study Of Kunming Machine Tool Financial Fraud From The Perspective Of Internal Control

With the improvement of the socialist market economy with Chinese characteristics,enterprises of all kinds of ownership are also developing under the tide of the times.As the most important component of the socialist market economy,state-owned holding enterprises play a leading role in the national economy.However,in recent years,a series of financial fraud scandals involving state-controlled listed companies have been exposed.False financial reports have done great harm to the securities market,which has not only led to a sharp devaluation of state-owned assets,but also harmed the interests of small and medium-sized investors,damaged the good development of the securities market,and further lost public trust in China's already unstable securities market.This thesis considers that the value of the research on the internal control of state-controlled listed companies lies in three aspects.First,it is to ensure the maintenance and appreciation of state-owned assets and the smooth operation of the national economy.Secondly,the improvement of internal control of listed companies can promote the progress of internal control of small and medium-sized enterprises.Finally,it is to promote anti-fraud construction and use internal control construction to ensure the healthy development of the securities market.In the future,anti-financial fraud will be a hot topic in the study of internal control.Combining theory with practice,this paper studies the financial fraud of listed companies from the perspective of internal control,and proposes targeted solutions.This thesis takes Kunming Machine Tool's financial fraud as an example to analyze.This company,having withdrew from the market in 2018,lost money for four consecutive years and was punished by the CSRC for financial fraud that lasted for many years.At the same time,the company's 2014,2016 and 2017 audit reports were issued with adverse opinions by internal control audit.Effective internal control can prevent the occurrence of financial fraud,Kunming Machine Tool financial fraud case exposed the company's internal control failure.From the perspective of internal control,this paper analyzes the financial fraud case of Kunming Machine Tool,and discusses the correlation between internal control failure and financial fraud.Summing up the problems that managers are above internal control,the supervision system of enterprises cannot give full play to its effect,and the financial control is not standardized,etc.How to fill these loopholes,create a good internal control environment and avoid financial fraud is the focus of this thesis.The reference significance of this article for China's securities market supervision lies in that the selected case is a typical state-controlled listed company and A+H listed company subject to two market supervision,so companies,with such a background but having long-term financial fraud and out-of-control internal control,is very representative.At the same time,I hope it can provide some references for regulators in the governance of the securities market.This thesis is divided into five parts.The first part is the research background and significance,research content and method,literature review at home and abroad and main innovation points.The second part is financial fraud and internal control related concepts and theoretical basis.The third part is Kunming Machine Tool case introduction.The fourth part is the case study of financial fraud,which explains the means and causes of Kunming Machine Tool financial fraud from the perspective of internal control.Finally,it analyzes and inspires the problems from the perspective of internal control.This thesis found that Kunming Machine Tool has many internal control defects,internal control failure is the main cause of financial fraud.Internal control defects will increase the probability of financial fraud.And effective internal control can reasonably ensure the quality of financial reports.