Research On Financial Restatement And Internal Control Over Financial Reporting

It is well known that financial reporting is an important approach for investors to understand the accounting information of listed companies. As the global economy to speed up the internationalization process, our countries’degree of opening to the outside world is getting deeper and deeper. But meanwhile, some international questions about financial reporting also appear in our country, including financial restatement of listed companies become a common problem. Since the last20years, academics and regulators are gradually concerned about the financial restatement. After a review of the financial restatement issues related literature, i found that current research ignores the internal control. This paper tries to treat the financial restatement problem from the perspective of internal control over financial reporting, to enrich the study and perfect the internal control over financial reporting.By adopting the combination of normative research and case study research method, based on the theoretical analysis, i statistical analysis the current situation, and then analyzes the case of financial restatement, to prove that the defect of listed company internal control may lead to financial restatements. And further, i researched the case company’s measures to perfect internal control system after financial restatement, to provide direct evidence for regulatory authorities to actively promote internal control construction.According to the research train of thought, this paper is divided into seven parts, as follows:Chapter1, introduction. This chapter first introduces this paper’s research background, research purpose and significance, put forward the research question, and elaborate the train of thought, introduce the research methods, point out the innovation part. Chapter2, literature review. The author sum up the literature about financial restatement home and abroad, including financial restatement company characteristics, the motivation of financial statement restatements, economic consequences as well as the relationship with corporate governance.Chapter3, theory and concept definition. The author firstly tidies the theory of financial report information and internal control over financial reporting, then defines the concept of financial restatement, classifies financial restatement in accordance with different standards, briefly discusses company financial restatements cause.Chapter4,statistical analysis of financial statement restatements. According to the restatement announcements of January1,2010to December31,2012all the financial restatements, i analyzed the characteristics of the company.Chapter5, analysis on financial restatement and internal control over financial reporting, the author discuss it mainly from the financial reporting internal control defects, key points of the construction, and how to suppress financial restatements.Chapter6,case study. I select a company named Annie shares for the case study, analyzed the main reason for financial restatement, discussing the internal control over financial reporting.Chapter7,conclusion.The author believes that the company’s financial report internal control affects financial restatements; the company financial restatement should according to the occurrence of financial restatements cause analysis its internal control over financial reporting, and take corresponding measures to "suit the remedy to the case".The main contribution of this paper is:collecting information of financial restatement from2010to2012A-share listed companies by hand and providing a copy of empirical data; analyzing the phenomenon of financial restatement which investors are easily overlooked to study financial reporting information quality problem; providing investors a new perspective to accurately grasp the company actual situation; analyzing the financial restatement on the company financial report internal control perspective, enriching the restated financial statements related research. Of course, there still exist some deficiencies:while in the process of manually collecting financial restatement announcement the author maintains enough rigor, still there may be some errors; then, although most of the company’s financial restatement behavior will convey negative messages, but we don’t rule out positive ones. And the author based on the company’s financial restatement behavior caused by mostly false or misleading information, can not cover all the situation. Due to my limited experience and knowledge, this research may has some limitations.