A Case Study Of Financial Fraud In Zhengzhou Sino-crystal Diamond Company

For the purpose of achieving performance indicators,improving market stock prices and maintaining listing qualifications,listed enterprises may adopt false increase of assets,fictitious income,conceal liabilities and costs and other ways to carry out financial fraud.When the financial fraud incident of Kangmei Pharmaceutical which caused a sensation in the capital market had not yet come to an end,China Securities Regulatory Commission(CSRC)again exposed Zhengzhou Sino-Crystal Diamond Company long-term systematic financial fraud on December 31,2020.Repeatedly banned financial fraud events not only affect the operating order of China’s capital market,but also hinder the long-term steady development of the financial market.As a leading enterprise of super hard materials in China,the controller of Zhengzhou Sino-Crystal Diamond Company uses illegal appropriation of enterprise funds,illegal guarantee and related party transactions to get the funds out of the body to satisfy personal interests.In order to further conceal the truth of their fund transfer,major shareholders do not hesitate to falsely disclose corporate financial information,which makes it difficult for minority shareholders and external regulatory agencies to grasp the development of the enterprise.In addition,in order to get more personal gain,the real controller is deliberately manipulating the stock price of the enterprise.After the small and medium investors blindly follow the investment,they cash out at the high price by means of equity pledge.These actions not only damage the interests of minority shareholders,but also let the enterprise Mired in debt.Due to the industry particularity of ultrahard materials,this paper selects the financial fraud case of Zhengzhou Sino-Crystal Diamond Company to analyze the systematic financial fraud under PBC.Firstly,this paper will introduce the relevant theories involved in the case analysis.Secondly,this paper introduces the financial fraud of Zhengzhou Sino-Crystal Diamond Company and the financial fraud means of the actual controller based on the theory of PBC.Then,the GONE theory is used to analyze the motivation of Zhengzhou Sino-Crystal Diamond Company financial fraud.Finally,based on the above analysis,put forward to the enterprise internal governance,audit and external supervision as a supplement to the management of enterprise financial fraud countermeasures,hoping to improve the quality of listed enterprise information disclosure,reduce the possibility of such financial fraud again.Through the study of this case,this paper obtains the ultrahard material industry in financial fraud with product value is difficult to accurately evaluate;Capital demand volume is large,easy to fabricate the name of cash outflow and other favorable conditions.Therefore,in the prevention of its financial fraud,the need from the enterprise level,accounting firm level and regulatory agency level to carry out multi-directional prevention and governance.Before formulating prevention and treatment countermeasures,we can comprehensively utilize the theory of PBC and GONE theory to analyze the motivation of financial fraud from the internal and external environment of the enterprise,so as to put forward countermeasures according to the actual situation of the enterprise.