The Research On Financial Fraud Of JH Group Reorganization Based On The Theory Of Fraud Risk Factors

Under the background of building the "new normal" economy,As an important part of the national economy,capital market plays an important role in promoting rational allocation of resources,raising funds and promoting structural upgrading.However,with the rapid development of capital market,some fraudulent behaviors of illegal enterprises occurred frequently,which challenges the bottom line of legal and moral.In addition,in the process of social development,new ways and means of corporate fraud emerged one after another.Therefore,the analysis of specific cases of corporate fraud under various times conditions is also of practical significance.This paper adopts literature research,case analysis and inductive analysis,taking the case of JH group,which was first reported by China Securities Regulatory Commission as a case of "false reorganization" in 2017.This paper systematically analyzes the whole process of falsification in the annual report of the enterprise from 2013 to 2015,including the means and methods of falsification and fraud identification,the general risk factors and individual risk factors in the theory of fraud risk factors,and analyzes the reasons for the falsification.Using the general risk factors and individual risk factors in the Theory of Fraud Risk Factors to analyze the causes of fraud,and according to the causes to put forward the measures to improve the anti-fraud system.Firstly,this paper analyzes the various fraudulent means used by JH Group to increase revenue,conceal liabilities and fabricate bank deposits,these methods are highly secretive and have little room for operation.In addition,the identifiable frauds of JH Group are analyzed according to the financial statements of 2013-2015 before the correction,the state of the enterprise and the state of the industry.It also finds out the unreasonable points in the comparison of financial indicators,current assets,cash flow of financing activities,financial products,business models and enterprise valuation during reorganization.Using the Bendford’s law to identify the fraudulent risks of JH group,the results were as expected.Subsequently,using the Theory of Fraud Risk Factors to analyze the motivation of fraud,it was found that:Among the general risk factors,there are many fraudulent opportunities in JH Group,such as unreasonable corporate governance structure,dominant shareholding structure,failure of internal control and so on;The possibility of fraud detection is also reduced due to the lack of internal audit and the failure of intermediary agencies;The low cost of fraudulent punishment leads to higher potential returns of fraud,and enterprises are willing to seek nothing but profit.In terms of individual risk factors,the common interest motives of JH Group itself,minority shareholders and ZA Company are translated into action under the guidance of low moral quality.These risk factors have contributed to the JH group’s behavior.Finally,the paper puts forward some measures,such as optimizing the ownership structure,perfecting the organizational structure and internal control system,perfecting the internal and external audit,broadening the financing channels,increasing the economic and legal costs of fraud and improving the management of moral quality,to weaken five risk factors and prevent the occurrence of fraud again.