Research Of Accounting Fraud On Long-term Equity Investment

The listed company practicing fraud on financial report is accounting phenomena, which does not occurred accidentally or in isolation. Chinese Capital market is just in a short trip, lack experience in market supervision. A lot of listed company transformed from State-Owned Enterprises, which bring a lot of problems. This is the reason why accounting fraud appears again and again in our country. China issued Enterprise Accounting Criterion No.2-Long-Term Equity Investment in 2006, this criteria has great different from the original standards, such as long-term equity investment, the initial investment measured through fair value calculation, equity investment balance does not be amortized, but shall be conducted a devalue test; the reversal of property-value reduction preparation doesn't allowed, and the equity method is changed to cost method for subsidiary company accounting. The implementation of the long-term equity investment standards in 2006 will make the traditional accounting fraud ineffective, meanwhile make room for the listed companies to start new profit manipulation and initiate new accounting fraud.This thesis integrates the standard study and case analysis, begins from history evolution of long-term equity investment, seeking for the evolution reason, progress and development of long-term equity investment. After that I make comparative studies on Accounting Standards and International Accounting Standards of long-term equity investment in 2006, then make evaluation according to the main changes. With specific cases from economic consequences of long-term equity investment standards in 2006, we find the classification of investment brings great influence on enterprise financial statements images, and the book value of the investment has a huge amount of variation with the investment returns under the cost method and equity method. Quantitative methods variation of long-term equity investment balance has major impact on state assets and owner's equity. Through specific cases analysis reveals the long-term equity investment standards in 2006 triggered new accounting fraud, which provides a scientific evidence for relative decision maker. Finally, this thesis offers suggestion for the application policy of long-term equity investment. It also provides new approaches for the future Accounting Standard revision, and is good to the further perfection of our Accounting Standards and keeping away listed company accounting fraud deed.