On the causes and means of financial fraud.
Accounting information is an important reference for external users of financial reports to understand the financial situation and operating results of enterprises, and it is also the main basis for business owners and government departments to make economic decisions. It plays a vital role in studying macroeconomics, regulating the market and developing the economy. This paper attempts to analyze the motivation and harm of financial fraud and the main means of financial fraud.
Keywords financial fraud earnings management
With the improvement of financial accounting system at home and abroad, financial fraud has been suppressed to a great extent. However, with the development of the economic situation, financial fraud has also appeared. This is because fundamentally speaking, there are still driving factors of financial fraud, the cost of fraud is low and the supervision is unfavorable, so it is impossible to completely ban this phenomenon.
First, the main reasons for financial fraud
Although there are many reasons for financial fraud, there are two reasons, internal and environmental.
(A) internal factors of the enterprise
1. Financing motivation. Enterprises need financing, one way is to absorb funds from the stock market through listing; Another way is borrowing, which mainly refers to loans from financial institutions. But no matter which way, enterprises need to have a good and healthy financial situation. The CSRC has strict requirements on the financial status of listed companies, because if an enterprise is labeled as ST due to continuous losses, investors' trust in it will be greatly reduced. Let's talk about lending to financial institutions. At present, all major commercial banks require enterprises to provide various accounting statements and financial indicators that can reflect their credit ability. Therefore, this has also prompted some companies to whitewash their accounting statements with earnings management when their financial situation is not good, so as to cope with the credit review of financial institutions such as banks and meet the expectations of investors.
2. Motivation to protect the market. Once a listed company loses money, it is urgent to get rid of the financial difficulties in order to maintain circulation. If the listing is terminated, not only the financing ability will be greatly reduced, but also the operating conditions of the company will be greatly negatively affected, leading to the bankruptcy of the company. It is precisely because of ST policy that listed companies try to avoid losses for several years in a row. In order to do this, they will intentionally increase their losses in a certain year, thus laying a good foundation for turning losses into profits in the next few years.
In addition, the particularity of China's stock issuance system makes it difficult for many enterprises to obtain listing qualifications, and enterprises often need to pay huge manpower, material resources and financial resources to obtain listing qualifications. This makes companies that want to go public and companies that want to keep their listing qualifications have strong financial fraud motives when the company's operating and financial conditions are not ideal.
3. Tax pressure. Contrary to some listed companies' efforts to maintain profitability in front of the public, some enterprises evade taxes by concealing income and inflating costs, which is another motive of financial fraud.
(2) Environmental factors
1. Poor accounting behavior environment. I believe that most accountants are unwilling to take the initiative to violate professional ethics and not abide by accounting standards. However, the position of accountant is very embarrassing at present. Although the Accounting Law clearly stipulates the professional ethics and accounting status of accountants, accounting is not independent in most enterprises. Accounting is also an internal employee, subordinate to enterprises and units, lacking independence. When enterprise leaders force accountants to whitewash financial statements and adjust profits for specific purposes, such as earnings management, concealing the truth, pursuing remuneration and promotion, or maximizing personal interests, accountants will fall into a dilemma. In order to survive and make a living, many accountants have to compromise, obey the leadership and help others.
2. Administrative supervision and management is not in place. At present, the supervision departments of enterprise accounting information in China are mainly finance, audit, CSRC, CBRC, CIRC and other supervision departments, and these departments have their own clear supervision scope. Ministries and commissions have a division of labor in accounting information supervision, but lack of cooperation, which makes some places that should be supervised appear empty window period and supervision is not in place. At the same time, because China's securities market is in the development stage, the relevant laws and regulations are not perfect enough, and the cost of financial fraud is low. Compared with the huge economic benefits brought by financial fraud, some enterprises are more willing to take risks.
Second, the harm of financial fraud
(A) endangering the market economy
A healthy social market economy is based on credit. If the accounting information is distorted, it will not only affect the national macro-control, but also cause harm to society, enterprises and units. False accounting information covering up the real situation not only affects the government's tax revenue, but also leads to the deviation between government decision-making and the actual situation to some extent.
(2) Endangering social interests.
Persistent financial fraud and lack of integrity make investors lose confidence in the investment market gradually, and cannot form a healthy securities market environment, which will have a negative impact on the development of the whole economy.
(3) endangering personal interests
Financial accounting was forced to make false accounts because of the bad living environment, but was investigated because of the East Bed incident. Some of them have their qualification certificates revoked, and even more, they have violated the law and been sanctioned by the law.
Third, the main means of financial fraud
(1) fictitious transaction
Fictitious transaction refers to the fabrication of untrue transactions, which makes the company's sales revenue and assets inflated. This is a common and bad financial fraud. Fictitious transactions refer to companies using fake contracts, fake documents, fake invoices, etc. Inflated income, cost and corresponding assets and liabilities. This makes the financial statements very different from the real financial situation and operating results of the company. All or part of the economic matters reflected in the financial report do not exist.
(2) Confirm the income in advance.
Although China's accounting standards for business enterprises have strict standards for the recognition of sales revenue, these standards are still based on judgment. Due to the flexibility of revenue recognition, it has also become one of the means of financial fraud. In order to cover up the company's unsatisfactory performance in the current period, some listed companies recognize products in stock or services that have not been carried out as current income in advance. What's more, they directly write off their income as sales receipts in future accounting periods. In fact, the product never leaves the warehouse or the service never goes on.
(3) One-time income adjustment profit
Manipulate profits by relying on one-time gains. These benefits are not continuous, but one-off, and there will be no continuous profit. When the profit and income brought by this part of income disappear, the enterprise will not only fail to reach the target predicted by the market according to its early profitability, but also lead to the incomparable accounting information in different accounting periods. Disposable one-time income includes investment income, transfer of ownership or use right of intangible assets, sale of physical assets, transfer of equity, related party transactions, etc.
(4) Manipulating related party transactions
Another main means for enterprises to manipulate profits is through transactions between affiliated enterprises. The main methods for listed companies to manipulate profits through related party transactions are as follows: (1) the use fee of funds occupied by related parties; Collect management fees of affiliated enterprises; Royalties; Special purchase and sale business; Internal transfer pricing, buy high and sell low or sell high and buy low, etc. (e) Capitalize expenses to adjust profits.
According to the Accounting Standards for Business Enterprises, income and expenses need to conform to the matching principle, and only expenses that meet the capitalization conditions can be capitalized, and enterprises cannot change them at will. Expenses eligible for capitalization cannot be amortized directly in the current accounting period, but must be amortized in multiple accounting periods that benefit. Capitalize the expenses that do not meet the capitalization conditions, and amortize the expenses that should be amortized in the current period in the subsequent accounting period, thus inflating the profits of the current period. Expenses used for capitalization of expenses to adjust profits include borrowing expenses, advertising expenses, research and development expenses, etc. Although the accounting standards for enterprises have strict provisions on capitalization expenses, enterprises still have some flexibility in determining capitalization expenses, which may manipulate profits.
(six) the use of accounting policies and accounting estimates can selectively manipulate accounting profits.
For accounting policies, enterprises can choose according to the requirements of accounting standards for enterprises and their own management characteristics within the scope of compliance with the standards. Enterprises should follow the principles of prudence, substance over form and importance, and the accounting policies adopted by enterprises should not be changed at will once they are selected, so as to ensure the comparability and reliability of accounting information. However, in order to achieve a certain goal, some enterprises will manipulate profits and choose accounting policies that are beneficial to them.
Common accounting policies used to adjust accounting profits:
1. revenue recognition principle;
2. Handling methods of borrowing costs;
3. Valuation method of inventory;
4. Accounting treatment method of long-term equity investment income;
5. Foreign currency conversion method;
6. Depreciation method of fixed assets;
7. Principles of consolidated statements.
Accounting estimation refers to the judgment made by enterprises on transactions or events with uncertain results according to the latest available information. Accounting estimation depends on the characteristics and judgment of business activities. Since it is a judgment, it is impossible to completely avoid manipulating accounting profits.
Common accounting estimates used to adjust accounting profits;
1. Estimated bad debts;
2. Inventory estimation;
3. Long-term deferred expenses and amortization period;
4. Estimate the expected service life and net salvage value of fixed assets;
5. Estimation of the benefit period of intangible assets;
6. Estimate according to the expected service life.
To sum up, due to the existence of financial fraud motives, the cost of financial fraud is low, and the ways of financial fraud are diversified and hidden, which makes investors, market economy and even accountants themselves suffer greatly. The government should strengthen supervision, especially cooperation between ministries, improve accounting standards and gradually standardize the securities market.
On how to prevent financial fraud.
With the constant adjustment and change of China's economic system, brand-new financial fraud appears frequently, and its fraud modes are varied, which is almost impossible to prevent, seriously endangering the stable growth and sustainable development of the national economy. Therefore, in view of financial fraud, how to formulate a series of effective schemes to combat fraud and curb the occurrence of financial accounting fraud has always been an important issue of great concern to all sectors of society. The author of this paper puts forward some personal suggestions on preventing financial fraud for reference.
With the rapid development of China's social economy, the accounting environment is becoming more and more complex, and its economic matters are also increasing, and the accounting system has changed and improved accordingly. However, in the process of accounting system reform, some units or individuals use their own convenience to falsify financial accounting, which not only brings huge losses to the country and the people, but also seriously destroys the market economic order, and even causes national macro-control mistakes, which provides convenience for economic crimes. Therefore, it is urgent to prevent and control financial fraud. Based on my personal experience in financial management for many years, the author puts forward some personal suggestions to prevent financial fraud for reference.
First, improve accounting integrity and beautify the social environment.
Accounting integrity is the basic moral quality of accounting personnel, which expresses a basic commitment of accounting to society. Especially in the 2 1 century, honesty is particularly important in the accounting industry. Effectively improving accounting integrity can not only provide a strong barrier to prevent financial fraud, but also effectively beautify the social environment and purify the social atmosphere. There are two main ways to improve accounting integrity: one is to strengthen the government's supervision function and create honest government officials. As the masters and regulators of state power, governments at all levels lead and dominate the national economy to a certain extent, that is, there is a contractual relationship with taxpayers, and integrity is the basis for maintaining the contractual relationship. Therefore, governments at all levels should establish and improve accounting laws and regulations, standardize and protect integrity, and put an end to the lack of integrity. Official figures. Figures are official? Exaggerated style, improve the integrity of the government.
At the same time, strengthen the supervision function of the government in the development of market economy, maintain a fair, just and open social competition environment, and create a good social atmosphere for the construction of integrity; Secondly, strengthen the integrity education of the whole people and create a social atmosphere of integrity. Honesty is not only a moral requirement for financial accountants, but also a requirement for all citizens. Honesty is the basic game rule that all citizens must follow in the market economy. Therefore, in order to effectively prevent financial fraud, strengthen the integrity education of the whole people, make people in the whole society realize the importance of integrity, form a social environment and public opinion atmosphere in which honest people are respected and dishonest people are despised, make accountants establish noble professional ethics, completely eliminate the subjective consciousness of financial fraud, and fundamentally curb the occurrence of financial fraud.
Two, improve the cost and risk of financial fraud, increase penalties.
As the main body of economic activities, all economic activities of units or individuals follow the principle of cost-effectiveness. The same is true of financial fraud, especially when the unit or individual finds that the expected cost of financial fraud is much lower than the expected income of fraud, it is difficult not to have the impulse of financial fraud. Therefore, in order to effectively prevent financial fraud, increase the cost and risk of financial fraud, increase the punishment for financial fraud units or individuals, and seriously investigate their legal responsibilities, it is undoubtedly one of the important measures to curb financial fraud.
Especially in China at present, the phenomenon that the trustworthy can not be effectively protected and the faithless can not be severely punished has greatly promoted the occurrence of financial fraud, and providing false accounting information has become the responsibility of some intermediaries? Open secrets? . And in such a social environment where the cost of breaking promises is too low, a trustworthy person will also become a faithless person? . If we want to change this situation, increase the punishment for financial fraud units or individuals, increase the cost and risk of financial fraud, and make counterfeiters unprofitable, it will surely become a powerful guarantee to prevent financial fraud.
Third, improve the quality of financial information and improve the internal accounting control system.
As the core framework of unit financial management, internal accounting control system always protects the safety and integrity of unit funds and property and the truthfulness and effectiveness of accounting information. Therefore, perfecting the internal accounting control system can not only effectively ensure that the economic activities of the unit are carried out under the permission of accounting laws and regulations, but also effectively control the free operation space of accounting and prevent financial fraud. Therefore, in order to better implement the relevant rules and regulations of the Accounting Law and strengthen the establishment and perfection of the internal accounting control system of each unit, it provides an important way to prevent financial accounting fraud. Legal obstacles? Since June, 20001,the Ministry of Finance and China Securities Regulatory Commission have promulgated a series of internal accounting control laws, regulations and other supporting provisions for the construction of internal accounting control system. The implementation and establishment of the internal accounting control system is based on the economic management of the controlled unit and the economic business process of the controlled unit. With this comprehensive and unified internal control management, the accounting authority is clarified, the accounting operation space is controlled, and the financial fraud behavior is controlled at the lowest point.
Fourth, improve audit independence and strengthen social supervision.
2 1 century, we are in the critical period of building a harmonious socialist society, and the market economy is the lifeblood of supporting national development. Therefore, it is increasingly important and prominent to standardize the behavior of market economy, maintain the order of financial laws and regulations and prevent the occurrence of financial fraud. In particular, as the basis of solving economic contradictions and ensuring healthy economic development, it is particularly important to effectively improve the independence of audit work and strengthen its economic supervision role. First of all, strengthen the supervision of the CPA industry and improve the role of social supervision. China's Institute of Certified Public Accountants has both administrative functions and industry self-discipline functions.
Therefore, what China should do at present is to straighten out the functions and division of labor of the CICPA, the Ministry of Finance, the CSRC and other departments in the supervision of the CPA industry, and establish a reasonable and comprehensive supervision system. Secondly, strengthen the audit independence of certified public accountants to ensure fairness. Independence is the soul of CPA audit. Only formally independent accountants can abide by the principles of independence, objectivity and fairness, and cannot protect any party or be diligent and conscientious. Therefore, our government should establish laws and regulations to protect the independence of accountants, so as to ensure that certified public accountants are strictly detached in their practice and are not dominated by any unit or individual. In this way, it provides a way to prevent financial fraud? Artificial barrier? .
Verb (abbreviation of verb) conclusion
To sum up, through the author's specific analysis of preventing financial fraud, we can more clearly understand that the development and spread of financial fraud will not only bring huge economic losses to units and countries, but also undermine the order of economic development. Therefore, strengthening the financial supervision and management mechanism and giving full play to the internal supervision functions of the government, society and units are of great importance to preventing financial fraud.
refer to
[1] Lu Xiaonan, Fu Hao. Research on Financial Fraud of Listed Companies in China [J]. Research Center of Shanghai Stock Exchange.
[2] Li Jinfeng. Financial fraud control of listed companies [J]. Cooperative Economy and Technology, 2006 (10).
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