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In recent years, financial fraud cases of listed companies in China have been repeatedly banned, which has seriously damaged the interests of minority shareholders and undermined the order of the capital market. At the same time, once discovered, it will greatly reduce the value of the company. The most fundamental reason of financial fraud is the defect of corporate governance. In view of this, from the perspective of corporate governance, this paper takes Wanfushengke, the first fraudulent enterprise market, as an example, analyzes its fraudulent means and deep-seated reasons, and then puts forward some countermeasures to prevent financial fraud of listed companies.
Keywords financial fraud; Corporate governance; Wanfushengke
China Library Classification Number: F275 Document Identification Number: Part A Number:1004-5937 (2014) 25-0064-03.
I. Introduction
With the gradual development of market economy and the maturity of capital market, the profitability of capital gradually appears. In recent years, a series of financial fraud cases have occurred in listed companies in China, such as "Yinguangxia" fraud case of Shenzhen main board listed company and "Greenland" fraud case of small and medium board listed company. The fraud cases of these listed companies have caused huge losses to investors and damaged their trust in listed companies and China capital market. Although the supervision of listed companies in China has been continuously strengthened, some companies are still driven by interests and use various methods to make financial fraud. From 2065438 to August 2002, Wanfushengke's financial fraud case became the first case of fraud in GEM.
II. Introduction to the background of the case
Wanfushengke (Hunan) Agricultural Development Co., Ltd., formerly known as Luxiang Wanfu Co., Ltd. in Taoyuan County, Hunan Province, was established in 2003. It was listed on the Growth Enterprise Market of Shenzhen Stock Exchange on September 27th, 20 1 1, with the stock code of 300268, referred to as "Wanfushengke". Mainly engaged in the production and sales of starch sugar series products such as rice crystalline glucose, rice high protein and high maltose syrup, it is a circular economy enterprise that comprehensively utilizes the by-products of rice deep processing.
Less than a year after listing, Wanfushengke was exposed to financial fraud. In the semi-annual report of 20 12, the company inflated its operating income1880,000 yuan, inflated its operating cost1460,000 yuan and inflated its net profit/4023160,000 yuan, which was quite large, and led to a change in the profit and loss direction of the company's financial report in the first half of 20 12. Therefore, Wanfushengke was put on file for investigation by Hunan Securities Regulatory Bureau, and was publicly condemned by Shenzhen Stock Exchange on 2012165438+1October 22. With the further development of the case, the fraud before the listing of Wanfushengke also surfaced. According to the public condemnation of Wanfushengke made by Shenzhen Stock Exchange on March 20 18+0 13, the company has false records of financial data, with accumulated inflated income of about 740 million yuan, inflated operating profit of about1800,000 yuan and inflated net profit of 65,438+. Among them, 20 1 1, the company's fictitious operating income is 280 million yuan, the operating profit is inflated by 654 13600 yuan, and the net profit attributable to shareholders of listed companies is inflated by 59 126900 yuan, accounting for 201/kl of the company's disclosed financial reports respectively. After adjusting the above inflated data, the company's operating income, operating profit and net profit attributable to shareholders of listed companies in 201/kloc-0 were 273 million yuan,-63,055,438+0,000 yuan and10.7 million yuan respectively, which was quite different from the relevant financial data disclosed by the company. As of May 13, 10, Wanfushengke's financial fraud case had a final result. The CSRC officially notified Wanfushengke of alleged fraudulent issuance and related intermediary violations, and punished relevant personnel.
Three, Wanfushengke financial fraud means analysis
Under normal circumstances, the result of financial fraud of a company is inflated operating income and profit. According to the relationship between the three financial statements in accounting, the increase of operating income and profit in the income statement is reflected in the balance sheet, which is the increase of assets. According to Wanfushengke's announcement, its specific fraudulent means mainly include inflated accounts receivable, inflated prepayments, inflated construction in progress and so on.
(a) Inflated accounts receivable
According to Wanfushengke's Announcement on Supplementary Disclosure of Important Information and Correction of Interim Report (hereinafter referred to as the Announcement), the net accounts receivable of 20 12 in the first half of the year were revised from the original128.3 million yuan to 412.5 million yuan, with a virtual increase of nearly 8.76 million yuan. In addition, the report shows that. Great changes have taken place in the top five customers. As shown in table 1, the top five customers of accounts receivable before correction did not appear in the list of the top five after correction, and the total accounts receivable of the top five customers decreased from 5120,000 yuan to164,000 yuan, indicating that their accounts receivable were seriously falsified, including forging sales contracts and fictitious sales business.
(b) The advance payment is inflated.
Prepayment refers to a kind of creditor's right that the buyer and the seller agree to pay part of the payment to the supplier in advance, but in fact, these prepayments of Wanfushengke are not all linked to real transactions. Wanfushengke's 20 1 1 annual report shows that the prepaid account is107000 yuan, while the actual corrected amount is 127929 million yuan, and the inflated prepaid account is107000 yuan. The announcement shows that the 2065438+prepaid account at the end of June 2002 was 145695500 yuan after correction, but it was actually 10 1007200 yuan, with an inflated increase of 44688300 yuan. Wanfushengke paid the company's funds to grain brokers and farmers through false transactions. In fact, on the one hand, most of the funds will be transferred to the bank account under its control, and then the funds will be recovered through sales collection; On the other hand, with the further development of the project, the advance payment can be transferred to the construction in progress, thus achieving the purpose of inflating the construction in progress.
(c) Expansion of construction in progress
Realizing inflated income and profits through projects under construction is the most brilliant means of Wanfushengke. Because the project under construction is still under construction, it is concealed and not as easy to be detected as accounts receivable. According to the announcement, from 2065438 to the end of June 2002, the construction in progress increased by 80.36 million yuan. Among them, the items with large inflated amount are shown in Table 2. The renovation project of heating workshop, starch expansion project and sewage treatment project increased by 75 million yuan.
Four, Wanfushengke financial fraud analysis
The occurrence of financial fraud in Wanfushengke shows that its corporate governance structure has serious defects. Corporate governance structure is the division of power within the company and the result of the "separation of three powers" among the shareholders' meeting, the board of directors and the board of supervisors, each of which performs its own duties and restricts each other. However, monopoly is more serious among listed companies in China. Major shareholders control the board of directors and managers, while the internal supervision of independent directors and audit committees is suppressed, which leads to the use of control rights by major shareholders to occupy the interests of minority shareholders.
(A) highly centralized ownership structure
Wanfushengke is a typical large enterprise. According to the 20 12 annual report, Gong Yongfu and Yang Ronghua hold 29.99% of the company's shares respectively, and they are husband and wife, so * * * holds 59.98% of the company's shares. This highly centralized ownership structure makes the actual controller Gong Yongfu and his wife. In the absence of equity checks and balances, the actual controller will override the internal control, and the company's major decisions will be made according to its will, which will invalidate the internal control system, thus achieving the purpose of manipulating profits and privatizing interests. Regarding the false records and major omissions in the 20 12 semi-annual report of Wanfushengke, Wanfushengke also believes that the internal control system has not been well implemented because of lax internal control. In addition, Gong Yongfu, the actual controller of the company, also serves as the chairman and general manager. This "two-in-one" corporate governance structure undermines the supervision and supervision mechanism of the board of directors and managers. The chairman (manager) grasps the daily business of the company, which is actually the manager's self-supervision, which is easy to cause financial fraud.
(2) Independent directors are not "independent"
The independence of independent directors determines the supervision efficiency of the board of directors. Therefore, China introduced the independent director system in 200 1. Because independent directors are more independent than ordinary directors, the independence of the board of directors of the company will be guaranteed after the implementation of the independent director system. However, most of the independent directors in China are mere formality, most of them are only part-time, and they don't put most of their time and energy into the affairs of the company at all. According to the 20 1 1 annual report of Wanfushengke, all three independent directors attended the six board meetings held in 20 1 1 year, and did not express their independent opinions on the financial fraud of Wanfushengke. As the only professional accountant among the three independent directors, Zou Lijuan has the qualification certificate of certified public accountant and rich practical experience. He can't be ignorant of the company's fraud, which shows that he has lost his due independence or failed to fulfill his supervisory duties. The other two independent directors, Shan Yang and Cheng Yunhui, are experts in agriculture and biology respectively, which shows that Wanfushengke chooses industry experts as independent directors, and regards independent directors as consultants rather than supervisors. Therefore, the independent directors of Wanfushengke did not exert their independence and failed to balance the board of directors and protect the interests of small and medium investors.
(3) the failure of the audit committee.
Most audit committees are composed of independent directors, and members must have professional knowledge in accounting and auditing. Therefore, the audit committee, as an important internal control mechanism, has a strong supervision function on the accounting behavior and disclosed statements within the company. However, when serious financial fraud occurred in Wanfushengke, the Audit Committee still believed that there were no major defects in the design and implementation of the company's internal control, and the self-evaluation report of the company's internal control was in line with the design and implementation of the company's internal control. Obviously, the internal audit of the company did not play its normal role, and the audit Committee did not effectively supervise the disclosure of major information. It can be said that the functions of the audit committee of Wanfushengke are basically absent.
Verb (abbreviation of verb) The Enlightenment of Wanfushengke's Financial Fraud
According to the above analysis, Wanfushengke's financial fraud is, in the final analysis, the defect of its corporate governance and the failure of its internal control system. Therefore, from the perspective of corporate governance, this paper puts forward the following suggestions to improve the efficiency of corporate governance and prevent financial fraud.
(1) Optimize the ownership structure and reduce the shareholding ratio of major shareholders.
The more concentrated the equity, the stronger the controlling shareholder's ability to restrain the accounting behavior of the company. In this case, the controlling shareholder has low binding force and makes false disclosure of accounting information for his own benefit, thus damaging the interests of minority shareholders. Therefore, we can gradually reduce the shareholding ratio of major shareholders, increase the shareholding ratio of institutions and the public, realize the situation of diversification of investment subjects, decentralization of equity and mutual checks and balances of major shareholders, and establish a voting exclusion system for stakeholders, thus preventing major shareholders from abusing their voting rights.
(2) Improve the system of independent directors and audit committee.
As an important corporate governance mechanism, the independence of independent directors and audit committees is very important. If the controlling shareholder has the right to appoint and remove directors, the independence of independent directors will be destroyed and the functions of the audit committee will not be fully exerted. Therefore, in order to give full play to the role of independent directors and audit committees, the compulsory voting avoidance system of controlling shareholders and their dispatched directors can be implemented, and minority shareholders can propose their own independent directors to safeguard the interests of minority shareholders. In addition, we should strengthen the supervision of the operational efficiency of independent directors and audit committees to avoid formalism.
(c) Separation of the chairman and the general manager.
In the case of high concentration of equity, if the chairman and general manager are the same person, the interests of the actual controller and management of the company are highly consistent, and the management makes business decisions for its own interests. However, the corporate governance mode of combining chairman and general manager makes the decision not be opposed. In this case, managers can easily breed the risk of accounting fraud, thus encroaching on the interests of the company and minority shareholders. Therefore, it is suggested that the chairman and general manager should be two independent persons to realize the internal control system of separation of incompatible duties.
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Wanfushengke Financial Fraud Case Analysis Paper 2 I. Background Introduction
Wanfushengke Co., Ltd. (referred to as "Wanfushengke" for short) is an agricultural product processing enterprise in Changde City, Hunan Province, mainly engaged in research and development, production and sales of rice deep-processed products. On September 27th, 20 1 1, it was listed on the Growth Enterprise Market. 201September 14, the company announced that it was investigated by Hunan Supervision Bureau of CSRC for allegedly violating relevant securities laws and regulations. On September 18, Wanfushengke announced that the CSRC had decided to initiate an investigation on the company and the stock was suspended from the next day. 1210.25, Wanfushengke issued the Announcement on Supplement and Correction of Important Information Disclosure in the Interim Report of 20 12 (hereinafter referred to as the Announcement on Supplement and Correction), acknowledging the inflated operating income in the semi-annual report of 20 12/0.88 million. Furthermore, the company's total profit in the first half of 20 12 changed from a profit of 2874.0 1 10,000 yuan to a loss of173700 yuan, a decrease of 138.88%. In addition, the company's suspension of production in the first half of the year has not been disclosed. On March 2, 20 13, Wanfushengke issued a self-inspection announcement, admitting financial fraud. At this point, Wanfushengke became the first stock of GEM fraud.
Second, analyze fraudulent means.
Generally speaking, the result of financial fraud in enterprises is inflated operating income and profits. According to the relationship between the three financial statements in accounting, the increase of operating income and profit in the income statement is reflected in the balance sheet, which is the increase of assets. According to Wanfushengke's announcement, its specific fraudulent means include inflating accounts receivable, inflating construction in progress and inflating prepayments.
(a) Expansion of operating income
Wanfushengke's main business project is to sell agricultural and sideline products such as rice and maltose. The actual sales revenue of most forged products is more than four or five times the normal selling price, so the forged sales revenue is more than 100 times the real sales revenue, and even some products are not actually sold, thus fabricating the existence of sales behavior out of thin air. The actual operating income of syrup is 203 17400 yuan, while the false report shows that the operating income is 12226 1200 yuan, which is inflated 10 1943800 yuan; The operating income of maltodextrin is 0 yuan, with a false report of 1 1238900 yuan and a false increase of 1 1238900 yuan; The actual operating income of the product was 8.2310.44 million yuan, which was falsely reported as 269.7602 million yuan and inflated as/kloc-0 1.874458 million yuan.
Recently, Wanfushengke released the 20 12 annual report, and the company lost 34 1 10,000 yuan last year. What is particularly embarrassing is that, despite the large-scale production line suspension in the first half of last year and the fraud crisis in the second half, Wanfushengke achieved a revenue of 296 million yuan, an increase of 8.39%. "In the case of fraud, sales have been greatly affected, and Wanfushengke also achieved a revenue of 2140,000 yuan in the second half of last year, which makes people doubt the authenticity of its performance." Due to the fraud of Wanfushengke, the upstream and downstream of the industrial chain have changed: upstream suppliers took the opportunity to raise prices, which greatly increased the company's operating costs; Downstream customers reduced the purchase quantity of Wanfushengke products, or asked the company to supply at a reduced price, and the sales volume of the company's products dropped sharply.
In addition, the top five accounts receivable before correction did not appear again after correction, and the total amount of the top five accounts receivable after correction reached 71727,800 yuan, 441237,700 yuan more than the actual situation of 27,604,200 yuan. It shows that there is serious fraud in accounts receivable. According to the investigation, Wanfushengke disclosed in the sales contract that the two contracts signed with Huayuan Grain and Oil Business Department and the three-point contract signed with Silly Cattle Food Factory did not exist. Huang Deyi, the owner of Yide Grain and Oil Trading Bank, is connected with the controlling shareholder of Wanfushengke, which shows that the company has forged sales contracts and fabricated sales business.
(b) Inflated advance payment
Accounts payable and prepayments include not only project funds, but also funds generated from daily operations. However, Wanfushengke's accounts payable are very small, with only 7.63 million yuan at the end of the first half of 20 12, which can be ignored. As for the advance payment, except for 20 1 1 at the end of the year, the amount has not been much. At the end of 20 1 1, the prepaid accounts of Wanfushengke increased by 449.44% compared with the end of last year. In this regard, the company explained that "the main reason is that the investment projects raised by the company have been fully launched and the advance payment for equipment has increased." The question is, since the advance payment should be reduced at the end of the first half of the year, why has the advance payment on the statement increased a lot? It has been explained that in daily business activities, a large amount of money is paid in advance. However, from the historical data, it is impossible for Wanfushengke's daily business activities to generate too many prepayments, and from the fact that the prepayments at the end of the first half of 20 1 1 are not high, there is no seasonal factor leading to a substantial increase in prepayments. In fact, according to the prospectus, at the end of the first half of 201/kloc-0, the purchase amount of prepaid brokers (raw materials) was only 9.55 million yuan.
(c) Inflated income and profits.
Through related party transactions, fictitious sales of related parties and sales pricing differences, the purpose of transferring profits or inflating profits is achieved. In the financial fraud case of Wanfushengke, there was obvious fraud in related party transactions. The report shows that Hunan Silly Cow Food Factory and Huaihua Xiaoya Food both contributed about130,000 yuan, but in the revised report, these two companies have disappeared from the top five customers: Mei Jia Food in Qidong, Hunan and Zhong Yi Candy Company in Tianjin contributed 654.38+056.1543,800 yuan and 654.38% respectively.
Wanfushengke has set up a large number of virtual supplier accounts outside. The owners of these accounts are real grain merchants, but they are actually controlled by Wanfushengke. Transfer self-owned funds into these accounts in the form of advance receipts, and then withdraw cash from them or transfer them back in other ways, which constitutes sales receipts, leading to an increase in sales scale, thus inflating operating profits.
Wanfushengke cooperated with a series of fake processes, such as privately engraving customers' fake official seals, compiling fake sales contracts, fake sales invoices, preparing bank documents and fake outbound orders. It makes the inflated sales revenue seem reasonable, and even goes to the tax department to pay taxes on the inflated income.
Inflated profits and income need to correspond to "assets". Wanfushengke chose to inflate "projects under construction" and "prepayments" in the process of fraud, and the construction projects raised by Wanfushengke were still under construction, which reduced the exposure risk. As for the prepaid account, whether it really happened remains to be verified. Maybe it really posted the funds and turned them back.
Third, the signal analysis of financial fraud in Wanfushengke
In the semi-annual report, the total operating income of the enterprise reached 23.22 million yuan, up 65.438+06.23% year-on-year, while the operating profit and total profit were only 25.54 million yuan and 28.74 million yuan, down -65.438+05.34% and -65.438+06% year-on-year. In the 20 1 1 annual report, the total operating income of the enterprise increased by 27.60%, the operating profit increased by 10.62%, and the total profit increased by 9. 1 1%. In the same year, the operating profit and total profit fluctuated greatly, which is doubtful.
Enterprises have a large number of prepayments, all of which are "prepayments for projects and equipment, and the projects are still under construction", while the corresponding customers are individuals and cannot be verified.
Compared with the end of 20 1 1, the number of projects under construction has increased a lot, but the degree of completion within half a year is very low. Only 50% of the heating workshop renovation project was completed, and only 2% of the sewage treatment project was completed. In addition, according to the 20 1 1 project under construction disclosed in the prospectus, there is no sewage treatment project. Then, the authenticity of this project in the semi-annual report is very doubtful. Compared with the annual report of 20 1 1, the semi-annual report of 201increased the investment by 12.5 times, but the project progress was reduced from 90% to 30%. However, the annual report of 20 12 did not mention the starch sugar expansion project at all, and it is unknown whether the project exists or has been completed.
Fourth, the enlightenment of financial fraud
Financial fraud cases occur frequently and have to be paid attention to. More importantly, financial fraud is not instantaneous, and long-term strategic planning must have clues to follow. We must reflect on how to make full use of the public information and risk-oriented audit mode of listed companies to find financial fraud of listed companies as soon as possible. In the Wanfushengke case, a large number of bank vouchers were forged. It is necessary to explain that there were no problems exposed before, and the relevant documents were not strictly audited. Therefore, the audit should pay attention to the audit of the original documents of related enterprises. Wanfushengke is a high-tech industry and a local enterprise with political achievements. Its industry background, listing procedures, financial support and technology research and development are all key breakthroughs in the audit. It may be necessary to strengthen field visits and obtain direct evidence. For sales companies, their contact with customers is also quite close. Therefore, through field visits to investigate the authenticity of its various businesses, fraud can be further prevented and discovered.
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