Fraud Audit Committee Inhibition Study Listed Companies' Financial Reports

Whether in the Government’s point or the market investor’s perspective, annualfinancial report is the most important channel to understand a company’s operating.Therefore, the authenticity of the company’s financial information has been the mainfocus of concern to who use the information. But in recent years, from the South Seacompany to Enron, a series of financial distortion cases make the majority financialinformation users questioned the financial information from the annual reports, andcause the whole market turbulence. In order to improve the overall authenticity of thefinancial information and decrease company’s financial reporting fraud. Relevantsupervision department are positive studying all kinds of effective system, onesolution is in the listed company introduced in the audit committee system.Audit committee how to achieve the desired results in the actual operation is theserious attention of scholars. Scholars not only to study from the macro factors, butalso from the point of the internal resource allocation to find how to improve theeffectiveness of the audit committee, but the conclusions are divergent. One of thereasons is: It’s difficult to obtain the information of the audit committee in the processof research, so it’s difficult to further quantify the major internal configurationindicators, some scholars using variable substitution method to improve the study.However, this approach will reduce the conclusion persuasive. With the regulationsenacted in2007requires listed companies to mandatory disclosure of the auditcommittee work report, the problem that the data is difficult to obtain be solved. Thispaper starts a new round study based on the information platform, to find how toimprove the effectiveness of the audit committee. Further explore exactly what kindof external environment and internal resources allocation can change the downturn ofthe audit committee.In the literature review section combs before scholar’s study on the effectivenessof the Audit Committee and learn scholars achievement. Then, generally descript the problems existing in the audit committee running. And find out the reasons which leadto the effectiveness of the audit committee in listed companies in China has not yetbeen effective. Use empirical study method, to disclose the audit committee workreport information as the main line, selecting the2007-2010financial reporting fraud,and select the corresponding paired samples, expected to seek the method which canimprove the effectiveness of the audit committee by comparing two groups ofcompanies which are different in internal audit committee set and the level ofcooperation with the external auditors. At the same time restore substitution variablescaused by missing data in before scholar’s research. Add new external factorsvariables in the original model and regression, expected to more accurately find theinternal and external factors which can suppress the financial reporting fraud byanalyzing the regression results. As the result it can provide the reference views of theregulations development and the actual operation of listed companies.