Fraudulent Financial Reporting: The Identification And Solution

The financial report, which can be used to transmit messages, is the basis of the efficient operation of securities business as well as decision-making for investors. However, fraudulent financial reporting can not play this role obviously. The problem of financial reporting fraud becomes a difficult issue that troubles so many people, so lots of scholars of academic and practice focus their attention on it ,trying to find out an effective method to identify it and get a solution.According to the information that China Securities Regulatory Commision provides, this thesis describes the means and types listed companies prepare their fraudulent financial reporting used in China. Next, from the finance,governance and auditing point of view, the writer designs 12 independent variables to make empirically testing. We use logistic regression to analyse the differences between 85 fraud firms and their counterparts whose financial reports are not fraudulent. The result indicates there are significant differences in variables: receivable turnover, shareholder meeting times, board of supervisors meeting times, ratio of audit fee and asset, and types of audit report. The Percentage Correct of identification model is 76.5%. In the end, we analyse the reasons of the existence of fraudulent financial report of our nation, and then put forward solutions to the problem of financial reporting fraud.