Research On Financial Fraud Identification And Governance Of CY Group Based On Risk Factor Theory

With the growth of Chinese market economy,especially the financial industry,the capital market provides a broader platform for all walks of life,and the number of enterprises entering the capital market is also increasing year by year.The reform of economic system brings listed companies not only the rapid economic development,but also the opportunity of financial fraud for speculation and arbitrage.Financial fraud always exists in domestic and foreign capital markets.Chinese securities market started late,financial fraud emerged in endlessly,seriously disturbed the effective operation of the capital market.Financial fraud has corrupted social moral atmosphere and affected the effect of national macro-control.Although enterprises can achieve their profit objectives by means of fraud,but this will also overturn the good image established before,so in order to maintain good market competition order,it is necessary to prevent financial fraud in listed companies,and this is also an important way to safeguard the legitimate rights and interests of small and medium-sized investors.It is of great significance to study the means and trend of financial fraud for prevention and control.This paper takes CY Group,the offending enterprise published by the China Securities Regulatory Commission in 2020,as the research object,draws on scholars’ views on fraud,and selects risk factor theory as the starting point of analysis combined with actual cases.In the part of the actual case,the time line of CY Group’s financial fraud is introduced first,and the main ways of financial fraud in CY Group are falsely increasing operating income and withdrawing goodwill impairment and measuring inventory by accounting methods that do not meet the requirements of accounting standards.Secondly,it identifies financial fraud means of CY Group from two perspectives.First from CY group from 2016 to 2020,the relevant data of financial statements and notes to information analysis CY group financial fraud means that repeated computation fictional overseas sales,operating income,high business reputation and provision for inventory write-down part,then on the basis of the theory of risk factors for CY group fraud means for identification for verification.In terms of individual risk factors,moral factors and motivation factors of fraud are investigated.CY Group’s senior managers lost their professional ethics,so they chose whether directors,supervisors and senior managers had a relevant professional title as the measurement standard.The company’s fraud motive is to realize the previous betting agreement and maintain the leading position in the industry,so it chooses six indicators: net profit rate of total assets,net profit rate of equity,inventory turnover,current assets turnover,operating net profit rate and fixed assets ratio.The general risk factors mainly consider the opportunity of fraud and the probability of fraud detection.CY group,a lack of mechanism in the internal governance for the occurrence of financial fraud potential internal opportunities,the failure of the third party audit supervision to reduce the likelihood of financial fraud external exposure,so this article on the internal governance institutions choose the number of shareholders’ general meeting,the independent directors proportion and the chairman and general manager to measure whether re-elected factor,External supervision chooses audit opinions and whether to change accounting firm indicators for measurement.Finally,based on the analysis of fraud factors,relevant suggestions are put forward from the perspective of the company and the society.From the perspective of individual risk factors,CY Group should improve the moral level and legal awareness of the management,and re-examine and set appropriate performance commitments for the previously adopted business strategy.From the perspective of general risk factors,CY Group should reduce the opportunity of internal fraud by optimizing the ownership structure and improving the independent director system.At the same time,strengthen external supervision,increase the independence of external audit institutions and increase legal penalties to reduce external opportunities for financial fraud.