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Profits of listed companies manipulated

Author: FengGuanSheng From: www.yourpaper.net Posted: 2009-10-10 02:53:55 Read:
The profits of listed companies to manipulate generally refers to the behavior of listed companies for some purposes, the use of various means to artificially adjust profit. Is generally believed that the choice of companies to adopt accounting policies or other means to increase or decrease the loss category subjects artificially raise or depress profits of behavior, that is, profit manipulation. Academia main differences between the concept of profit manipulation is that, the profit manipulation in the end is not illegal behavior. One view is that and profit manipulation part of compliance to regulate their profits, while the other part is the illegal act. Some profit manipulation in violation of the relevant laws and regulations of accounting, but a considerable portion of the profits manipulation does not violate the laws and regulations, which makes it more difficult to distinguish profit manipulation. Another view is that profit manipulation is the adjustment of profits through illegal, this is mainly due to the academic community in recent years (also known as "income", "management profit") the concept of "earnings management". The so-called earnings management refers to the management of the company to maximize the utility or the market value of the company's choice of accounting policies to regulate the behavior of the company's surplus. The main difference between earnings management and profit manipulation is one of earnings management through lawful means adjustment of profits, profit manipulation adjustment of profits through illegal means.

Using the asset restructuring adjustment of profits
The reorganization of assets is the implementation of the assets of the enterprises in order to optimize the capital structure, the adjustment of industrial structure, and the completion of the strategic shift for purposes such conversion and the equity conversion. However, in some listed companies, asset restructuring was used as an important means of profit manipulation. Year approaches, ROE less than 10% of the company or companies in which the losses have assets reorganization, transfer of profits to non-listed companies listed company. Asset restructuring of listed companies crows become the Phoenix trick. In 2007 four companies forecasted to more than 1000% profit surge 60% rely on the results of restructuring.
The Huayi Electric announced on October 30, 2007, the company implemented a major reorganization of assets, the company's main business has undergone a fundamental change significantly enhance the profitability of assets, expected 2007 1-12 month net profit compared with a year earlier will grow by more than 2700%, last year over the same period (not to the new accounting standards adjusted) net profit of 2,544,100 yuan, earnings per share of $ 0.01.
Since the company was reporting period, the country estate new shares to buy assets of a series of asset restructuring work is completed, to enter the real estate business in the fourth quarter will produce significant benefits. January to December 2007, an increase of about 3500% to 3800% performance. 2006 annual results: 1348 234.58 yuan net profit, earnings per share of 0.021 yuan.

Second, the change accounting methods adjust profit
Changes in accounting method will affect corporate profits. Revenue accounting method for long-term investment from the cost method to the equity method, the investment companies in accordance with accounting equity share of the invested enterprises account for its investment income (ie virtually no dividend income). At the same time, the income tax law is taxed according to how much investment enterprises whether share dividends and bonuses from being invested enterprises. Therefore, in the case of profitable investment enterprises will invest the revenue accounting methods by the cost method to the equity method, on the one hand can be inflated profit for the period, on the other hand are not required to pay income tax for these increased profits really killing two birds with one stone, creating wealth. In fact, changing the method of accounting has become some of the profits of listed companies as a means of manipulation.

Third, the long-term hidden losses adjusted profit
Receivables Long-term losses are: receivables enterprises selling products, providing services and other reasons, the amount received should the buyer or receiving labor units, because it is the main business enterprise sales camp business, therefore, in general, accounts receivable, ability to resume a great impact on corporate performance. But for more than three years of accounts receivable, with minimal likelihood of recovery, should be transferred according to the provisions for bad debts and profit or loss, more than three years, according to the provisions of receivables to a bad debt. This shows that the receivable great impact on revenue. In reality, there is such a case, that the needs of companies in order to inflated sales and falsifying accounts receivable, manipulated for profit "accounts receivable" account must be aroused special attention.
2. Pending property damage long-term losses are: loss is caused due to some reason in the current period should be treated in the current period, but if the intention is not in the current treatment, to reduce the current expenses, so as to achieve the effect of inflated profits.
3 in the construction of long-term losses are: This is mainly reflected in the majority of enterprises in the self-constructed assets, will the external part of the integration into the funds. Borrower shall schedule accrued interest, according to the accounting system, this part of the interest on borrowings should be capitalized in construction in progress, did not apply for the completion of formalities before. If enterprises under construction are completed without completion of final accounts, the interest can be included in construction in progress costs so incurred to reduce (reduction in finance costs), on the other hand, can be less depreciations, so that you can be from two regard to inflated profits.
4 The share of the cost is not amortized: For enterprises, prepaid expenses and deferred assets essentially be an expense that has already occurred, the subjects included in the profit or loss should be apportioned within the prescribed time limit, but some enterprises in order to A PARTICULAR PURPOSE fewer stalls do not even stand. The new accounting system has this strict restrictions, it is estimated that such a phenomenon in the future will be reduced.
The Dahlman company had to use this method to manage earnings. The fixed asset investment continued, often have huge amounts of construction in progress, and these projects are often not on time benefits. Dahlman first offering to raise 1.47 billion for investment in fixed assets, and thereafter twice a placement of shares to raise a total of nearly 600 million yuan, is also a major investment in fixed assets; major engineering construction projects jewelry processing production line extension , Xi'an International Jewelry Trade Center, Dujiangyan gem processing center, eco-agriculture and horticulture project cycle, is expected to generate benefits from one year to three years. Dahlman board of directors almost every year proposed a new fixed asset investment projects invested hundreds of thousands of yuan, "construction in progress" in the company's total assets amounts chronically high.
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