Research On Corporate Financial Fraud And Its Supervision

With the continuous improvement and development of China's capital market,more and more financial fraud events exposed in public in recent years.However,most of the existing researches focus on the listed companies on the main board,small and medium-sized board and GEM,and there are few researches on the new three-board companies.National Equities Exchange and Quotations is another great exploration to improve China's capital market.As an indispensable part of the capital market,trading fluctuation smoothly in National Equities Exchange and Quotations has significant impact on the capital market.At present,the National Equities Exchange and Quotations needs to be improved.The study of financial fraud in the National Equities Exchange and Quotations is conducive to its further development.Therefore,from the perspective of the study of financial fraud on the National Equities Exchange and Quotations,this paper adopts the literature research method,case study method and inductive comparison method.This article collects suspected financial fraud companies from the first fraud case of the National Equities Exchange and Quotations in July 2016 to December 31,2018.There are exist three representative companies,such as Senxianyuan Co.,Ltd..,Ningxia Kejie Lithium Battery Co.,Ltd.and Wuhan Yindu Culture Media Co.,Ltd.,to find the fraud motivation,fraud means and its consequences,to make recommendations on the regulation of the financial fraud,and draw the corresponding conclusions.This paper firstly introduces the motivation theory of financial fraud and the economic theory of accounting supervision,which lays a certain theoretical foundation for the later research and analysis.Then,from the 36 suspected fraudulent companies in the National Equities Exchange and Quotations,three representative companies were selected and introduced.Then the motivation of enterprise fraud is analyzed from two aspects of individual risk factors and general risk factors.This paper argues that the individual risk factors of enterprise fraud contains low moral standards of employees and a large number of economic interests,and the general risk factors mainly include equity monopoly,management in affiliated companies,imperfect internal control system,difficult to find related party transactions,insecure securities institutions,the punishment after discovery is low cost,etc.This paper summarizes the financial fraud of enterprises by means of less cost,related transactions,replenishment against accounts payable,inflated main business income,and the funds occupied by related parties are not disclosed.This paper analyzes the adverse consequences of financial fraud,which is not conducive to the development of the new over-the-counter market,harms the future business development of the company and harms the interests of the users of accounting information.Finally,this paper focus on three aspects such as government supervision,social supervision and corporate internal supervision to analyses methods that can effectively avoid financial fraud in new three-board companies.In terms of corporate internal supervision,we can adjust the equities' structure in company,enforce the power of the board of supervision,establish the system of independent director and vest reasonable power and responsibility to the financial staffs.In social supervision aspect,we can strengthen the information disclosure of company,raise the punishments for financial fraud companies such as delisted the company from the National Equities Exchange and Quotations.In the aspect of government supervision,government can give the guideline for the new three-board companies,enhance the construction of accounting laws and regulations,strengthen the construction of accounting supervision subjects and strengthen the re-supervision of government supervision.