Case Study On Financial Fraud Of Q Company

Financial fraud has long been a persistent problem in capital markets and socio-economic development.The first international case of financial fraud in listed companies can be traced back to the South Sea Company in 1720.The more typical cases of financial fraud in China’s capital market include Lantian,Greenland and so on.In recent years,the more typical cases are Swertia,two Kang,Ruixing,etc.The problem of financial fraud has been repeatedly prohibited,which has seriously hurt the trust of investors and hindered the healthy development of the market.As the economic business becomes more and more complex,financial fraud cases gradually develop from single individual and individual subject financial fraud to systemic engineering.Financial fraud presents the characteristics of systemic,complex,wide range of involvement,and strong concealment.For example,Swertia Island takes advantage of the difficulty of seafood inventory;Ruixing Coffee takes advantage of system loopholes.In this paper,the case of Q Company uses various means such as fictitious cash flow,related party synergy,hollowing out of the company by the major shareholder and using the characteristics of assets,and the financial fraud is highly comprehensive.In the face of the new characteristics of financial fraud,the means of preventing and controlling financial fraud in the past gradually show weakness,and new countermeasures need to be studied.This paper adopts the case study method to analyze the financial fraud of Company Q,and then summarizes the prevention and control measures,in order to provide reference for companies,accounting firms and regulatory authorities to prevent financial fraud.Company Q is chosen because,on the one hand,the case is new and there are still few studies.The analysis of Company Q can enrich the library of financial fraud case studies.On the other hand,other analyses of the external opportunities of fraud in Company Q from the audit perspective almost focus on the issue of CPA independence,while the loopholes in specific audit procedures are rarely analyzed.The authors enrich the research in this area by making a specific analysis of this aspect in the context of their work experience in the firm and the information disclosed by Company Q.The research in this paper begins with a study of previous research,related concepts and theories in China and abroad.The theoretical study lays the foundation for the subsequent research.Secondly,through extensive review,collection and organization of disclosed information,the authors compiled the business process and financial fraud events of Company Q.After that,combining the market environment,audit process and disclosed information,the authors analyze the motive,means and the impact caused by the fraud.Finally,the paper develops several insights into the prevention and control of financial fraud in three aspects:motivation,opportunity and ethics.On the motivation side of fraud,it is necessary to deal with the motivation of fraud brought by poor efficiency,financing needs,and stock closing;on the opportunity side,it is necessary to strengthen internal control,the execution of audit procedures by accounting firms in place and the increase of penalties by regulators;on the ethical side,it is necessary to cultivate a corporate culture of honesty and trustworthiness and emphasis on professional ethics.This paper expects that,in an environment where financial fraud has taken on new characteristics,some useful insights can be formed through the study of financial fraud in Q companies to prevent and control financial fraud.