| At the critical stage to build a well-off society,the relationships between enterprises are not hostility any more,mixing the concept of win-win cooperation.They are not fighting alone in business,choosing combination or reorganization.In this way,“embracing strategy” is a necessary way to help the enterprises survival and development,the group company is one of the “embracing strategy”.Parent company(group company)and its subsidiaries,branch belongs are related parties.The relationships between subsidiaries can also be called a related party,the business transitions between these companies can form related transactions.Because of the objective factors: area,time,inventory,cost factors,listed companies are choosing related transactions.During the related transitions,the parent company would pressure the branch or subsidiary on their business data or important decision.Therefore,the transactions are likely to evolve into illegal behavior.This is the reason why so many experts and scholars think about how to prevent taking advantage of related transactions to financial fraud.If the company does exist illegal related party transactions,the group company is bound to be concealed it in order to enhance performance,make the net profit.Listed companies using related party transactions for financial fraud will not only damage the interests of shareholders,but also disrupt the market economy competitive environment.Due to the easy handling and frequent occurrence of related party transactions,whether the legal compliance is the key inspection target of the supervisory function department and auditing.From the case of Beisheng Pharmaceutical Co.,Ltd.using related-party transactions to transfer funds for the group,allocating funds to each other within the Yaxing Group,and signing a false contract by the Beidahuang Group Company,they found that they both used the connected transactions to make false profits and financial fraud.Therefore,deepening the research on the frauds of related party transactions can have a positive impact in maintaining the rights and interests of the minority shareholders,strengthening the internal control and management,perfecting the affiliated transaction system,improving the audit quality,and playing an indelible role in regulating the market economic order.In view of this,this article mainly uses the corrupt triangle theory as a foundation,takes Hainan Kangzhi Pharmaceutical Co.Ltd.to make use of the affiliated transaction to carry on the financial malpractice as the case,deeply analyzes its cause of fraud,the motivation,and puts forward the governance suggestion,has the important practical significance.This paper stated the literature of related-party transaction,introduces the motivation and means of using related-party transaction for financial fraud.Therefore,base on iceberg theory,information asymmetry theory and triangle theory,building the analysis framework of related-party transaction fraud theoretical,to analysis the case company withheld deliberately related-parties.Using related-transaction inflated incomes fraudulent.Further analysis shows by comparing financial reports,the main cause of HONZ PHARMACEUTICAL CO.LTD is in their first year of listing confronted "Nimesulide" event.In order to keep the performance of the company and to restore the confidence of investors,they take risk of related-party transaction,resulting the facts of violation.All in all,this article analysis the listing company how to prevent using relatedparties to fraud in four angles: the internal management of listed companies,promoting the related transaction management system,external regulators and intensify punishment.Here comes the conclusion: firstly,improve the enterprise management mechanism is the basic way to prevent using related-party transactions to financial fraud,we can start with perfecting the corporate governance structure and improving the independent director and the internal auditing.Secondly,boosting the related transaction management system is the necessary condition to prevent using connected transactions from financial fraud,defining the scope of related parties and transactions,perfecting the information disclosure and improving the disclosure of connected transactions pricing mode,etc.Moreover,strengthening the connected transaction external supervision is the important guarantee to prevent using related party transactions from financial fraud.Not only certified public accountants should improve their professional competence,keep their professional skepticism and attentions,implement the relevant audit procedures strictly.The CSRC,sponsor agencies,media,food and drug administration to strengthen external supervision at the same time.Finally,intensifying the administrative punishment is the effective way to prevent using connected transactions from financial fraud. |
