A Case Study Of Revenue Fraud Based On Risk Factor Theory

In recent years,with the continuous reform and development of China’s capital market,financial fraud cases of listed companies have become more and more frequent.Financial fraud not only brings huge losses to investors,but also seriously disrupts the normal order of the capital market and has an adverse impact on the development of China’s socialist market economy.In the history of financial fraud cases in the capital market,revenue is the hardest hit area of fraud.At present,the means of revenue fraud are gradually diversified and hidden with the economic development.They often start with internal and external economic activities,and are often financial fraud matched with document flow,cash flow and even goods logistics,which brings new challenges to the capital market to prevent fraud risk.Firstly,this paper reviews and summarizes the literature on the means,motivation and identification of financial fraud at home and abroad.On the basis of introducing the concept of financial fraud,this paper describes and explains the concept of revenue fraud that needs to be used in this paper.Then it expounds the company profile,case process and punishment results of Eastern Gold Jad.Then,after identifying the business model of Eastern Gold Jad and finding the relevant business segments most likely to engage in financial fraud,this paper finds that there are many places in the company’s financial report that do not comply with the financial cross check relationship,such as the abnormal linkage between the sales expense rate and the growth rate of operating revenue,the abnormal cash ratio of main business,and many places that do not comply with the business logic,such as not selling inventory in the face of debt crisis,The abnormal increase of accounts receivable and the provision for impairment in subsequent years,as well as the information showing the abnormal characteristics of its customers and suppliers.The pledged inventory value far exceeds the loan value and other financial and non-financial information can identify the fictitious purchase and sales transactions of Eastern Gold Jad.On this basis,this paper studies the causes of Eastern Gold Jad’s financial fraud from five factors: morality,motivation,opportunity,the probability of being found and the degree of punishment.In terms of causes,the major shareholders’ excessive pursuit of personal interests and the low integrity and morality of the company’s management are the fundamental reasons for financial fraud;The phenomenon that the company has a dominant share,the existence of independent directors and the board of supervisors in name only,and the special inventory and industry practices provide opportunities for fraud;Facing the pressure of profound changes in the industry,fraudsters have the need for fraud in order to achieve the purpose of financing;Considering that the exposure probability of fraud is small and the cost of fraud is too low,the relevant responsible person chose to implement financial fraud.Finally,according to the above research,this paper suggests that the regulatory authorities should further strengthen the punishment of financial fraud,the listed companies themselves should improve the corporate governance mechanism,and the certified public accountants should maintain their independence,implement more careful analysis procedures,use the Internet it big data audit,maintain professional suspicion and so on to prevent the implementation of revenue fraud.