A Model Research About Financial Statement Fraud Detection Of Our Country's Listed Company Based On The Fraud Triangle Theory

The Financial statement fraud induced the CPA industry,so the CPA is gaming with fraud from the beginning.In recent years,the spread of fraud makes the ability and existence value of CPA be questioned. Governments and regulators have taken actions to improve auditor's ability of disclosing financial statement fraud,reduce the audit risk and improve the quality of accounting information.The Chinese Institute of Certified Public Accountants (CICPA) has issued the No.1141auditing standard to strengthen the method of inspecting,detecting fraud.But we can find through the reality that the effect of the standard is limited.So this paper do the research aims to improve auditor's detection ability and reduce the audit risk.The article is based on fraud triangle theory, searching for fraud risk factors from the pressure,opportunity and excuse factor. This paper chooses financial condition,operating results,cash flows as the pressure factor, chooses internal corporate governance factor as the opportunity factor, such as the ownership concetration, the propotion of independent director on the board of directors,board size,chooses the compensation incentive as the excuse factor. The research collects a sample of95China listed companies committing financial statement fraud from2001to2010and the corresponding95matched companies.Select the variable through paired-samples test between fraud samples and the matched samples,then construct the Logistic fraud detection model by stepwise.The model builded by the paper can detect73.3%of the sample.It suggest that the listed company facing fraud pressure, opportunity and excuse is more likely to fraud And the research find the financial condition, board size and compensation incentive correlate highly with financial statement fraud.The company with a large amount of other receivables,money funds,high debt asset ratio,low net cash fows from operating activities is facing more pressuer.The senior executive can easier control a smaller board size,which has more possibility to fraud. The senior executive who get lower compensation is more likely to fraud.So the paper suggests that auditors,investors and the regulators can use the model to control the risk,standardize information and improve the transparency of the market.