Research On The Financial Fraud Of XinZhongji

Since 2010, with the rapid development of stock market, enterprises raise funds for their self development by stock market, and also receive more investment channels. However, the market-allocated resources is not equal distribution but optimization selection. Thus, for its own good, the enterprises choose financial fraud, such as Lantian Stock, event of Yinguangxia, Wanfushengke, Nanfang Textile, New Earth, Xinzhongji, which disrupts the market allocating resources and also makes the relevant investors and creditors suffer huge losses. All that cause significant adverse impact on the healthy development of the capital market.Based on the above background, this article mainly wants to design a identifying index of financial fraud to help the government, auditors, medium and small shareholders to improve the ability of identifying financial fraud. And this paper will analyze the index based on financial fraud case of Xinzhongji. For these purposes, the paper is divided into six parts. The first part is an introduction to the background, theoretical and practical significance, and the necessity of this research. The second part elaborates related concepts and theoretical basis. This part expounds financial fraud, financial analysis and financial fraud identification and establishes the scope of the study. The third part is the financial fraud of listed companies and hazard analysis. This part will analyze ideas, methods, tools and hazard of financial fraud in listed companies. The fourth part is the preliminary design and testing of identifying index of financial fraud. In this section, the writer preliminarily designs and tests financial indicators for identifying financial fraud according to the third part of the research results. The fifth part is to retest based on the identifying indicators of financial fraud of Xinzhongji, that is to say, in preliminary tests, the case of Xinzhongji is chosen to test. The sixth part is the research results, meanwhile, relevant enlightenment and some recommendations for identifying financial fraud.The study concludes as follows:(1) The motivationsof financial fraud in listed companies are mostly declining performance, IPO, keeping market share.(2) Financial fraud of listed companies inflatesrevenues of main business.(3) Identifying index of financial fraud in this article has a strong practical value and reference value, meanwhile, it can help the public and auditorsimprove the identification ability of financial fraud.(4) The identifying index of financial fraud with associated indicators analysis and trend of return on equality has an obvious impacton identifying fraud and has the highest efficiency.Moreover, monetary fundin theassetstructure accounted for asset-liability ratio. Accordingly, recommendations are as follows: Firstly, suggesting relevant government departments at the end of year checking annual filings of listed companies randomly with the participation of identifying index of financial fraud. Secondly, for the auditors, the auditing work should give consideration to inside and outsidewith the business and the use of identifying index of financial fraud. Thirdly,for the public, whether the financial data of a listed company is creditableand whether worth the investment, in addition to refer to audit reports of auditors, the public also need analyze by using identifying index of financial fraud to make a decision.