Identification And Governance Of Financial Fraud Based On The Fraud Triangle

As the gradual developing of economic reform in China,the capital market that many companies used for IPO and refinancing is gradually developing and maturing.And it has become one of the important ways for many companies to develop themselves.Therefore,maintaining stable order of the capital market has become a necessary precondition for the healthy development of Chinese economy and the whole society.However,the financial fraud is a more than 300 years and troubled world-class problems.Chinese capital market is no exception,the phenomenon of financial fraud cannot be forbidden absolutely.And the method of financial fraud constantly refurbished with the strengthening of the supervision.Corporation's illegal activities will seriously reduce the credibility of the Corporation,against the interests of shareholders,investment institutions and related personnel,thereby undermining the development of the capital market.Fraud triangle theory holds that the incidence of financial fraud must have three factors at the same time: pressure,opportunity and self-rationalization.Missing any of the above can not constitute financial fraud.Preventing the occurrence of financial fraud must take action from these factors to reduce and eliminate the possibilities of fraud,which can restrain financial fraud from the source.At first,this paper introduces the research background and meanings to review and comment the existing research results.Secondly,this paper expounds the concepts,features and performance of financial fraud in the current capital market.Then it introduces the concepts of fraud triangle theory.Thirdly,this paper presents the company profile and developments of ZiXin Pharmaceutical and analysis the performance and specific measures of ZiXin Pharmaceutical's financial fraud.Fourthly,with the ZiXin Pharmaceutical financial fraud event as the breakthrough point,this paper use of fraud triangle theory to analysis the company's financial fraud and the deep causes of the consequences of fraud.Finally,this paper recommends from eliminating fraud motivation,reducing fraud opportunity and eliminating fraud excuse to control measures of ZiXin Pharmaceutical's financial fraud.This paper is innovative in the following three areas: One is that I use Triangle Theory of Fraud and empirical analysis to discover the pressure factors,opportunity factors and self-rationalization factors that cause the listing Corporation financial fraud.The second is that I collected the latest dates which had been forfeited by SEC in 2014 because of fraud to analysis three factors of fraud.The third is that the analysis of measures to prevent financial fraud is not only from the perspective of three factors independently,but also recommend from the perspective of interrelated factors.