Research On The Identification And Prevention Of Financial Fraud Based On Fraud Risk Factor Theory

At present,China's economy is gradually moving towards stable,healthy and high-quality development,in which the capital market has made great contributions in financing capital,optimizing the allocation of market resources,and comprehensively upgrading the economic system reform.However,behind the booming capital market,the imperfection of company system and accounting standards,and the lag of relevant laws and regulations lead to many problems accumulated in the daily operation of enterprises,which hinder the further development of the capital market.Among them,the problem of financial fraud is particularly prominent.In recent years,there have been numerous financial frauds,ranging from scallops "wandering" in Zhangzi Island,to the forgery of foreign political letters and overseas contracts by Abbott,to the false increase of profits by kangdexin of 11.9 billion yuan.The occurrence of financial fraud will first bring adverse effects on the reputation and credit of the company,making the company face greater risks and losses.Secondly,it will bring incalculable losses to the investors and stakeholders of the company.Finally,the frequent occurrence of financial fraud will even destroy investors' confidence in the capital market,weaken the role of resource allocation in the capital market,hinder the function of the market economy,and seriously disrupt the normal order of the capital market and the securities market.How to identify and prevent the occurrence of financial fraud has become an urgent task.If we don't pay attention to the harm brought by financial fraud and crack down and manage it severely,the capital market of our country will be seriously eroded and the healthy development of economy will be hindered.Therefore,it is necessary for investors,listed companies and regulators to understand the causes of financial fraud,common means,identify and expose fraud in time,and master certain preventive measures to reduce the risk of financial fraud.This article focuses on the financial fraud of Kangmei pharmaceutical industry,and makes a comprehensive analysis of the financial fraud of Kangmei pharmaceutical industry: firstly,it expounds the background of the financial fraud case of Kangmei pharmaceutical industry;secondly,it analyzes the specific means and methods of financial fraud of Kangmei pharmaceutical industry,and analyzes the signal characteristics of financial fraud of the company from three levels: financial,organizational management and company operation.Secondly,based on the theory of financial fraud risk factors,this paper focuses on the analysis of fraud: in terms of individual risk factors,the top management of Kangmei pharmaceutical industry lacks professional ethics and legal awareness;the practitioners of intermediary institutions do not maintain their due professional suspicion and fulfill their duties diligently.The motivation of corporate fraud is mainly to cover up the declining trend of corporate performance and maintain the leading position in the industry;the company's directors make use of their own management control rights and information advantages to seek private.In terms of general risk factors,the imperfection of Kangmei pharmaceutical's internal governance mechanism leads to the absence of internal control system of the whole company,which provides potential internal opportunities for the occurrence of financial fraud.In addition,the characteristics of flexibility and fuzziness of China's accounting system and lagging laws and regulations provide external opportunities for the occurrence of fraud.The failure of supervision by the third-party audit institutions reduces the possibility of external exposure;the company's management and relevant insiders form a community of interests,which reduces the possibility of internal exposure through interest bundling.Finally,compared with the benefits obtained by Kangmei pharmaceutical industry in the capital market,the price paid by fraud after being found is very slight or even negligible,and the deterrent force is insufficient.Finally,through the risk factor theory,this paper analyzes the financial fraud of Kangmei pharmaceutical industry,and puts forward five suggestions and countermeasures.Specifically including: first,improve the system construction,eliminate financial fraud opportunities,require to improve the company's equity structure and internal governance,eliminate internal financial fraud opportunities,and improve the regulatory system,eliminate external financial fraud opportunities;second,strengthen internal management and external supervision,timely detect and effectively prevent financial fraud,mainly including improving the company's internal control system,strengthening the financial dance The third is to increase the punishment,increase the illegal cost of financial fraud,improve the efficiency and strength of financial fraud investigation and punishment,and at the same time,pursue the responsibility of the listed intermediary agencies for life;the fourth is to improve the morality of relevant subjects Quality,strengthen the professional ethics,including improving the company's management ethics and ethics and strengthen the ethical education of auditors,and constantly improve the level of professional work.Fifth,set reasonable development goals to promote the healthy and stable development of enterprises.