The Research On The Financial Report Fraud Detection Of Listed Companies In China

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 to be listed finance fraud practices long-standing, harms widely, in recent years a growing emphasis on the prevention of financial fraud, but with little result, not only failed to curb financial fraud, contrary to some listed companies to adopt a more skills means of anti-preventing, greatly intensified the trend. The Problem of financial reporting fraud becomes a difficult issue that troubles 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.This article, from the actual situation, according to information about punished publicly listed companies due to irregularities in financial reporting between 2003 and 2009 in China Securities Regulatory Commission, describes means and types of fraud in financial reporting of Chinese listed companies in detail and draws some characteristics, which are common in financial fraud companies and differentiate from non-fraud companies, simultaneously, it designs variables from the dynamic financial index indicators and non-financial indicators reflecting the company's internal control and governance, and non-parametric test is used to differentiate significant level between twenty dynamic financial index indicators and eight non-financial indicators. Then, it gradually removes and screens variables by analyzing correlation and main factors, finally, logistic regression is used to construct model of detecting fraud in financial reporting, empirical results show that Asset Quality Index, Earnings Quality Index, Receivable Accounts Turnover Index, Total Accruals to Total Assets Index, Asset-liability Ratio Index, Cash to Debt Index, Short-term funds Sources Index, Earned Interest Times Index, Cash to Income Index, Current Ratio Index, ROE Index, CEO duality, H₅ index, Z index, Type of Audit opinion of companies with fraud are significantly different from non-fraud ones, thus, correct classification rate of this mode gets to 90%. Finally, this paper will give many resolutions from the standard of the internal governance and external supervision.The main innovation is to specify twenty-eight indicators, and introduces dynamic financial index indicators and non-financial indicators reflecting the company's internal control and governance, a variety of methods and angles are brought to extract important factors, then, in the process of constructing detection mode, changes in cash flow are contained in the extraction system of indicators, thus, the detection accuracy has been improved.