Improve The Legislation On The Supervision Of Accounting Information

The preliminary accounting-related legal system has been formed, with the Accounting Lawas its body and the Company Law and the Securities Law as its assistants. But there are still somefalse presentations of the accounting information and financial frauds in the securities market inChina. These phenomena expose there are many problems in the system. Therefore, we mustcomplete the legal rules related so as to resolve the problems and exert the due power of theaccounting-related legal system.This paper covers four parts: In Part 1, the legal actuality of accountinginformation supervision in securities market in China is presented. Health-southCorporation of America and Yin Guang Xia of our country are introduced in Part 2.The tricks, the failures of audit and the revelations of each case are studied in this part.In Part 3, through comparing and analyzing the purposes, the tricks, the causes andthe supervisions of the two financial fraud scandals, the writer finds that accountinginformation supervision contains the following: inner control system, theindependence of CPA (Certified Public Accountant), the senior managements'supervision and the harsh measures to the frauds. In Part 4, the following proposals onhow to perfect the legal mechanism of accountant information supervision in Chinaare given: to enhance inner control of accounting;to definitude the legal status ofaccounting criterion;to stipulate the legal liability on accounting of the principals ofthe corporations;to reform the system of independent audit;to enhance theindependence of CPA;to conform the Accounting Law to the rules relating to thepunishment on the financial frauds in the securities market and to punish the fraudsmore severely. The writer hopes these proposals can provide some references for thecompletion of the litigation system of accounting information supervision in securitiesmarket in China.