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Fraud motive analysis of listed companies and its management strategy

Author: WangTao From: www.yourpaper.net Posted: 2010-03-04 17:16:00 Read:
Abstract: In real life, the listed company's financial fraud is not uncommon, and has seriously disrupted the social and economic order, its comprehensive management is not only necessary, but also very tight. Through the "triangle theory" in-depth analysis of fraud motivation of listed companies, and thus proposed the corresponding countermeasures.
Keywords: the listed company counterfeiters motivation Countermeasures

With the increasing level of our government for the supervision of the Public Company Accounting behavior in the listed company's financial fraud phenomenon has been contained to some degree. However, in the case of the current financial crisis triggered by the U.S. subprime mortgage crisis sweeping the global economy, a deep level analysis of listed companies Cheating motivation, and it is particularly important to take positive and effective countermeasures.

A listed company fraud motivation analysis

From a conceptual point of view, the listed company of fraud by the company's management through outreach to misstated financial information, misleading information about the user's behavior or phenomenon. Affected by the fraud of listed companies, the economic interests of the shareholders, creditors, and other users of financial statements suffered damage. So, in essence, said, listed company fraud is a business engaged in corrupt conduct. According to the founder of the Association of Certified Fraud Examiners in the United States Eberron strange (W. Steve Albrecht) "triangle theory": the generation of any enterprise engaged in corrupt conduct, often three elements together by pressure, opportunity and an excuse made, the lack of any entry elements are impossible to really form of corrupt conduct. Throughout the motive for fraud of listed companies in China are nothing more than these aspects:
(A) acts of fraud mitigation corporate internal and external pressure
Company by counterfeiters to improve the so-called "Performance
Operators in order to improve its operating results, often rely on issuing shares to "misappropriating". In our country, "the Companies Act, the Securities Act and the China Securities Regulatory Commission promulgated a series of regulations on the company's listing eligibility, allotment, listing clearly defined. As in the validation of the Listing Qualifications, the company must be three consecutive years of profitability, and in practice will be listed on the stock pricing and corporate earnings per share linked. The basic conditions which would ultimately become the direct motivation for some companies listing financial packaging ".
In addition, due to the application for listing at the same time there are still invisible quota, combined with the complex process, as well as a variety of expenses, the Listing Qualifications is a shell resources. For this reason, many companies operate often listed the company as a manifestation of the corporate image and results of operations, these factors will lead to as much as possible to avoid the situation of three consecutive losses, even if there has been a similar phenomenon, corporate often through related party transactions and asset restructuring the profit modification, in order to achieve the listed financing purposes.
By fraud, local leaders can improve the enterprises of the "achievements" can be rewarded
In an area, the number of companies listed on the amount is often linked with the achievements of local government leaders, which led directly to some of the local administrative department is keen to promote the company listed. On the one hand, after the listing of a company for the local circle to the funds do not need a large amount of debt service, which can alleviate the burden on local finances, on the other hand, the company is listed, local administrative officials and will have a so-called economic development "achievement." In addition, the company is listed in the implicit not tell Road unknown personal interests, but also regional pursued by companies listed on the incentives. Therefore, in some areas, make the company listed for the fake of course, the expense. For businesses, once listed not only reputable, while local government departments to give the corresponding reward obtained so strong profit-driven enterprises will actively or passively to trickery.
By fraud, the enterprise in a certain extent temporarily alleviate funding pressures
As we all know, capital is essential for enterprises running "blood", an enterprise wants to obtain bank loans, must first pass through the bank's assessment of enterprise indicators, such as solvency, credit capacity, these indicators contents usually is reflected in corporate financial reporting and accounting information, therefore, some of the poor financial condition of enterprises in order to obtain the trust of financial institutions, at the expense of corporate credit some frauds.
(B) the lack of system and mechanism, from the objective to the listed company fraud provides an opportunity and an excuse
The current governance structure of listed companies in China imperfect regulatory system is not perfect, finance staff is not high sense of ethics, as well as the regulatory system is not perfect, the shortcomings of fraud to the listed companies to provide an opportunity and an excuse.
An imperfect governance structure of listed companies. With the modern enterprise system and enterprise corporate system implementation in China, domestic listed companies are based on the requirements established corporate governance elements of the shareholders, board of directors, board of supervisors and managers. This governance mechanism, however, is mostly a mere formality in many companies, to build and create, in actual operation, but there are two aspects of large shareholders relative to the control and management, who is in charge ", so when listed company to seek a major shareholder or the interests of senior managers to maximize the fraud is difficult to avoid, and inspired by top management, such fraud once started basically can succeed. 2. Supervision and management system is not perfect. The regulatory system of the listed companies SFC management, financial oversight, audit and supervision, tax supervision. The relative dispersion of regulatory authorities, regulatory standards are not uniform, the regulatory functions of the cross-cutting a whole, and therefore can not play a regulatory role effectively.
3 finance staff awareness of professional ethics. Ethics practitioners should follow the code of conduct in professional activities. Accounting professional ethics require accounting practitioners consciously abide by the Code of Conduct of the industry recognized maintain the prestige of the career in public. However, due to the impact of multistakeholder reason, accounting practitioners and occasionally make some unethical things.
4. Lack of rules and regulations and policies and the loopholes, but also for listed companies Cheating provide opportunities and excuses. China's current laws and regulations in the process of formulation lacks foresight, temporary patches once encountered a problem in the implementation process immediately palliatives practices of listed companies can easily make large drill its empty. Recognized as income on corporate debt restructuring is repeated revisions in the implementation process.

Governance of listed companies fraud strategy

In view of all the corporate financial accounting misconduct, as early as the fourth of the 1994 National Work Conference on Accounting, the State Council proposed accounting order to rectify the pledge; NPC, respectively in 1993 and 1999, twice the time accounting Law "was revised and improved. In recent years, in order to further standardize the behavior of corporate accounting, in 2006, the Ministry of Finance issued a corporate system of accounting standards; 2008 the Ministry of Finance and other five ministries jointly issued the enterprise internal control basic norms; At the same time, the regulatory agencies as a listed company China Securities Regulatory Commission, issued by the relevant laws and regulations designed to regulate the securities market, such as "Provisional Regulations on stock issuance and transaction management and public offering of shares company information disclosure content and format of the Guidelines endures, but also seize the opportunity to develop and revise guidance for the establishment of an independent director system in listed companies and the loss of listed companies to suspend the listing and terminate the listing of the implementation measures, constraints on the behavior of listed companies accounting, corporate financial information in order to improve the quality.
Fraud risk matrix theory, accounting fraud usually requires the participation of executives whose behavior is often out of the interests of the company. In China, due to the system and mechanism, which the unadulterated various interests intricate. Therefore, comprehensive management of listed companies Cheating, I think the key should take the following countermeasures:
(A) the establishment and improvement of external regulatory mechanisms in line with market economy rules.
The first is to further transform government functions to reduce the impact of government business for enterprises to create a good environment for corporate governance. By the laws, rules and regulations, to give the Board of Directors of the Company, the Securities and Futures Commission, the judiciary, the media and market participants to more market supervision rights, and fully effective exercise of supervision to ensure that these organizations, in particular, by the laws, rules and regulations regulating intermediaries and external audit institutions of the practice, and constantly improve the independence of the audit.
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