The Study On Financial Fraud Of Listed Companies Under New Accounting Standards

With China’s rapid economic development, capital market becomes more prosperous, expanding its capacity. A certain extent, the bond linking the listed companies and the majority of outside investors is the disclosed financial report. At present, with the stock market size of a large number of lifting the ban and the gradually full circulation, the number and the market share of outside investors increase a lot, so how to protect the outsides investors’interests, how to ensure the quality of financial report information and how to prevent financial fraud has become all focus of attention.Since 1720 the British have the world’s first case of the company’s financial fraud——the event of South Sea Company, at home and abroad have appeared a series of well-known financial fraud, such as Enron, WorldCom, Xerox financial fraud, Adolf financial fraud case, China’s Hongguang, Zhengbaiwen, Guangxia and etc. History has proved that financial fraud damaged the interests of stakeholders, and endangered the development of listed companies, weakened stock market functions, weakened the accounting profession credit, disrupted the macro-economic order, harmfulness is enormous.So as to regulate corporate accounting behavior and improve the quality of accounting information, on February 15,2006 the Ministry of Finance promulgated the "Enterprise Accounting Standards 2006", which was implemented within the scope of listed companies from January 1,2007 onwards, and encourage other corporate executives. On August 22,2008 Ministry of Finance’s Notice of accounting information quality inspection (XIV) pointed out that the old and new accounting standards had achieved a steady and smooth transition, the quality of accounting information has been further enhanced. However, inspection also found that some enterprises in understanding the Standards existed bias, judgments not accurate, executives not appropriate, a few companies have committed breaches of norms to manipulate profits, fictitious transactions and other serious acts of accounting fraud. It can be seen, with the move toward international accounting standards, the gradual deepening of the reform and accession to WTO, enterprise economic activities have become increasingly numerous and complex, manifestations of financial fraud has become diversified, complicated and concealed, and its harmfulness became more serious than ever. Thus,, "keeping pace with the times" research on financial fraud becomes important.This paper selected the listed company as the research object, and arranged research contents as follows:Introduction. This section describes the research background and motivation, research ideas, objectives and research methods.Literature review part mainly reviews financial fraud’s driving forces, identification, techniques and governance in four aspects from domestic and international literature, and summarizes the inspiration from the research trend.The meaning analysis of financial fraud. Paper first analyzes the definition of financial fraud, and summarizes its features as intentional, fraudulent, information distortion, and harmful, combined with the audit practice of fraud, financial fraud presents the new features of complicated, concealed and dynamic. Then financial fraud is classified to financial report fraud and assets embezzlement fraud, or to financing fraud, investment fraud, tax fraud, foreign currency fraud and the liquidation of fraud. After analyzing the distinction and contact between financial fraud and accounting fraud, it can be seen that financial fraud are fraud practices of financial management level, while the accounting fraud are at the level of accounting fraud, the connotation of financial fraud is far greater than accounting fraud. Finally, through interpretation of fraud related concepts such as information distortion, earnings management, earnings manipulation and financial fraud, to clarify the relationship between each other and deduce a three-dimensional understanding of the financial fraud through a icon means.The relationship between financial fraud and accounting standards. Paper first analyzes the nature and characteristics of accounting standards. Then, through distinguishing financial fraud and earnings management, and analyzing the relations between financial fraud, earnings management and accounting standards, so as to attempt to establish a theoretical framework system as the core of financial fraudThe status quo of financial fraud under the new standards in the listed company. Start with the major changes of new standards, focusing on the suppressive effect and the opening up new space for financial fraud, so as to provide some ideas or learning for fraud auditing and governance. And then, it is the empirical analysis of listed companies financial fraud status quo, summarizing fraud means and features. Finally article exposes the harmfulness of financial fraud.Finally, this paper puts forward governance proposals:to improve the management mechanism of executives of listed companies, to perfect the system of independent directors of listed companies; to perfect the supervisory system for listed companies; to strengthen rule of law, amendments and improve the existing legal system; to increase the punishment to prevent the occurrence of financial fraud; to strengthen the external oversight functions; to strengthen the laws and regulations of the propaganda and education to enhance awareness of the law; to strengthen the integrity of ethics.This study mainly used empirical analysis, in the analysis process also used outlined method, induction, deduction and comparative analysis.The main innovation in this paper has the following three aspects:(a) Parsing the distinction and contact of financial fraud and accounting fraud, thus to reduce a correct understanding of the financial fraud, and to rectify the phenomenon of confusion financial fraud and accounting fraud still existing in the current academic community; (b) This article focuses on financial fraud, meanwhile introduces earnings management, through distinguishing financial fraud and earnings management, and analyzing the relations between financial fraud, earnings management and accounting standards, so as to attempt to establish a theoretical framework system as the core of financial fraud; (c)This study starts from the new standards, basing on in-depth analysis to the changes of new accounting standards, analyzes its impact on financial fraud and the status quo of financial fraud, and then raises some "keeping pace with the times" governance proposals.