The Case Study Of ZY Company Connected Transaction Fraud

Ever since the reform and opening,with the rapid development of our country’s economy, the establishment and development of stock market,more and more companies choose to ipo.With the rapid development of stock market and globalization,companies hold others stock to promote their capability and occupy the market, so complex relationship between the connected parties.Connected transaction is a neutral economic behavior,which attract a lot attention because of concealment and complexity.On the one hand,connected transaction save the cost and improve the efficiency.On the other hand,unfair connected transaction makes it become a tool to manipulate profits and whitewash financial information.From the study of the existing research,we analyzes the theory of connected parties and connected transaction summarize the common means of connected transaction fraud, base on the asymmetric information theory,principal-agent Theory and fraud triangle theory,analyzes the ZY company’s connected transactions.ZY company undisclosed the connected parties and connected transactions,and establish the transaction chain to buy and sell all by itself.The actual controller want to achieve the goal of refinancing and maximize their cash in shates,so when the deficiencies in internal control,CPA dereliction of duty,or relevant departments’ weak supervision happen, controller use the development of the firm as excuse then transaction with the connected parties.For tunneling through connected transaction fraud, do harm to the interests of minority shareholders for meet the economic interests of individual and family.In this paper,base on the combination of theory and case analysis,to protect minority shareholders and regulate the connected transaction and give advice to preventing connected transaction fraud.To optimize the internal control of listed companies,build a reasonable corporate structure to balance the right,establish a scientific incentive mechanism to eliminate the contradiction between agent and principal.Optimize the internal audit environment, pay attention to the internal audit work.Design targeted audit procedures.CPA should improve their professional competence,maintain professional skepticism,keep an eye on risky area, implement the relevant audit procedures strictly in the audit process.Regulatory authorities should improve the supervision and management system, strengthen the supervision of connected transaction before and after.Speed up the legislation of connected transaction, strengthen punishment when there exist the fraudsters.Through the study of connected transaction fraud,it helps to improve the regulatorysystem,encourage enterprises to build construction of strengthen internal control system and speed up the legislation of connected transaction.Regulating connected transactions is good to help protect the interests of minority share holders and maintain order in the stock market.