The Research Of Internal Control Based On Restraining Financial Fraud

As China's market economy and modern enterprise system developing, financial fraud has become very prominent in the current socio-economic problems seriously affect the development of the market economy. Caused many of the root causes of financial fraud, and the author to be from the perspective of internal control the problem.This article analyses financial fraud result in internal control in the inadequate internal control system of background, and profiting from the COSO internal control framework and the spirit to the five elements of internal controls for perspective, internal control and financial fraud combine research. Discussion of the proposed financial fraud based on the suppression of internal controls and measures to improve the suggestions.Internal control theory is to carry out the analysis of the basis for the concept of internal control from the start in this paper, It starts from basic internal control concepts and describes in terms of characteristics, described the objectives of internal controls andinternal control of the five elements------that is, control environment, risk assessment,control activities, information and communication and monitoring, to prevent and detect financial fraud is playing an important role. Not only to identify and explain the behavior of financial fraud, but also found in the embryonic stage of financial fraud.Through analyzing internal control elements and financial fraud in order to put curb financial fraud.In order to studying 44 financial fraud companies and 44 non-corrupt companies which from Shanghai and Shenzhen Stock Exchange. First of all, descriptive analysis, followed by regression analysis of the evidence: We can draw a conclusion that if the chairman and general managers are the same person the company is likely to financial fraud because the person has too much power in the company to be controlled. Under the circumstances, having their own mechanisms for oversight deficiencies, chairman and managing director of the terms of reference is too large and thus lost the necessary internal controls.If the proportion of the independent directors in the board of directors is high the company can be controlled and carrying out the use of board of directors to avoid the financial fraud. On this basis, from three exploratory which establishing a complete and scientific system of internal control; Establishing and improving the supervision and feedback system; practicing internal control self-assessment made to improve internal control measures and Some Suggestions.