Research On The Main Means Of Financial Fraud

Misstatement of financial information has not only become the focus of the economic social and financial fields, but also the major challenges in China. The paper based on the new standards on accounting and auditing taking implementation beginning on January 1, 2007, the samples are the listed companies punished by the China Securities Regulatory Commission, Shanghai Stock Exchange, or Shenzhen Stock Exchange because of financial misstatement, the paper analyzed main fields, the means and the behaviors etc. that used by the listed companies which are punished to make the discoursing misstatements of financial information in 2002-2006 and 2007- 2014.It is researched that the misstatements of corporation’s financial statements mainly concentrated in three areas, those are discoursing the portions or announcing the false information, the false profits and the false balance sheets, and the first one has become the mainly mean that corporations use to misstate the financial information, besides, there are so many ways to misstate financial information for a company, and it occurs in many fields.Before the implementation of new standards, the listing corporations use the imaginary incomes and expenses to manipulate the inflated profits, and use the fictitious assets and liabilities to make the balance sheets. They are the main means for companies to make a false balance sheet. Meanwhile, discoursing the parts or the false are also the ways which are most commonly used by listing corporations and most of the listing corporations are using this way to hide the external guarantees, the relationships, the related transactions and other important matters of the company.With the change of the guidelines, the financial statements of listed companies involved in the behavior of misstatements been declined, in some extent, the new guidelines to curb the occurrence by some means. Such as less using transfer cost, less provision for impairment, fictitious investment income and changes in accounting policies adopted were significantly decreased in proportion of the company, disclose the using of funds raised real conceal equity or asset pledge, mortgage and false disclosure of foreign investment companies have been reduced, multi-use billing and fictitious inventories, intangible assets, monetary funds and other phenomena have not been found anymore. So changes to a certain extent the guidelines to curb the occurrence of such acts is been working.But also there are some new misstatements means, such as by multiplying amortization fictitious profits, using virtual minus accounts payable and other payables, receivables and other virtual reduction of retained earnings and other acts of false inflated assets and liabilities table, and false disclosure of information related to the temporary increase significantly the number of companies, as well as periodic reports false disclosure relationship, the number of related transactions also increased. These all need innovations in accounting, auditing standards and regulatory means to be restricted.In addition, this thesis also found that most companies use within two financial misstatement methods at the same time to going public. After the introduction of the new guidelines, the number of companies who use four financial misstatement methods at the same time to going pubic are relative large. There are also some companies at most use nine financial misstatement methods to going public at one time. These to some extent, increased the difficulties of the relevant departments to investigate. However, some company financial misstatement behavior can maintain a certain years, and some companies’ illegal behaviors are not found in time until the new guidelines carried out. So after 2007, there were more and more companies being investigate, most of them have 7 years time different, and the longest time can reach 20 years. The thesis also statistics the numbers of the companies and their property, it found out that since 2002 the number of companies being treated are reach the maximum. With the changes of the new guidelines, the numbers decreased significantly. In those investigated companies, most are non-state-owned holding companies. At last, this thesis gives proposal and suggestions to the arguments.