Research On Financial Fraud Of Biological Assets In Agricultural Enterprises

In recent years,with the rapid development of Chinese capital market,many enterprises choose to further expand their scale,improve their operation mode and enhance their market influence by listing.However,in recent years,Securities Supervision Commission has frequently exposed the financial fraud of listed companies,in which agricultural enterprises account for a large proportion.The frequently exposure of financial fraud has quickly attracted the attention of all parties.The company’s fraud won’t only damage the interests of investors,but also have a seriously impact on the company’s reputation when it exposed,and even hinder the healthy development of Chinese capital market.As the main assets of agricultural enterprises,biological assets create convenient conditions for corporate financial fraud due to its transformation,diversity,high-risk and cyclical characteristics.Therefore,it is extremely important to find out the motivation and methods of financial fraud by agricultural enterprises using biological assets in advance to standardize the capital market.Zhangzidao company was punished by the Securities Supervision Commission in 2020.As a typical representative of agricultural company in China,Zhangzidao company has obvious motivation and means of financial fraud by using biological assets.Therefore,this paper taking Zhangzidao company as an example,mainly analyzes its fraud from six parts.The first part combs the viewpoints of fraud motivation,fraud means and governance of fraud mentioned in the relevant literature of financial fraud.The second part introduces the concepts and characteristics of biological assets and financial fraud.This paper analyzes Zhangzidao company based on information asymmetry theory,signal transmission theory and triangle theory of fraud.The third part introduces the case of Zhangzidao company.Zhangzidao company has the illegal fact of adjusting profits by adjusting operating costs,non operating income and asset impairment losses,so it was punished by the Securities Supervision Commission in 2020.The fourth part first analyzes the motivation of the company’s financial fraud from three aspects: pressure,opportunity and excuse: the company has the pressure of be delisted and competition with peers,the opportunities brought by the chaotic management of the company’s biological assets and the failure of internal control,as well as the lack of legal awareness of the management,using the excuse of high risk of biological assets and greatly affected by the environment.Then,it specifically analyzes the four fraud means of Zhangzidao company,including false recording of biological asset inventory,forging biological asset fishing area,illegal disclosure of biological asset information and taking advantage of biological asset supervision loopholes.The fifth part puts forward four countermeasures based on the motivation and means of fraud: First,the company should strengthen the construction of internal control of biological asset management from the perspective of increasing the proportion of the board of directors,ensuring its independence and maintaining the independence of the internal audit department,improve the internal and external reporting mechanism of the enterprise;Second,the company should strengthen the inventory supervision of biological assets from the aspects of hiring experts to assist in inventory taking,improving the proportion and time of inventory supervision,carrying equipment on ships and making full video records;Third,companies should improve their disclosure of biological assets information,and make timely,comprehensive and real disclosure.They can also be disclosed through official account and We Chat public number.Fourth,improve the external supervision of biological assets.Auditors should strengthen the learning of biological assets while maintaining their independence.If necessary,they can use the strength of experts and high-tech means.The sixth part is to provide more ideas and prospects for the company to prevent financial fraud in time.