The Case Analysis Of The Overseas Financial Fraud Of Chinese Listed Companies

In recent years,with the promotion of the "One Belt and One Road" strategy,the net amount of cross-border investments keeps double-digit annual growth rate,and more and more listed companies have been participating in the process of the " One Belt and One Road ".Chinese enterprises make overseas business under the support of policies,tax concessions,however,cross-border business is still facing great risks,including the macro-level of political risk,economic risk,market risk,as well as the industry and enterprise level risk.Government supervision plays a weak role in cross-border business.Besides,it is difficult for small and medium-sized accounting firms to guarantee the audit quality of independent audit in Cross-border audits.The cross-border financial fraud of Chinese listed companies is increasing.In this paper,the author analyzed the case of Jiang Su Ya Bai Te company,who made the significant Cross-border financial fraud cases in 2015 to illustrate the bad influence of cross-border financial fraud.Primarily,the author explained the reasons for the fraud based on the GONE theory.It's mainly by the pressure of the enterprise cannot achieve the promised profits giving to the investors during backdoor listing.In order to avoid the expensive share compensation,the company took the risk of making cross-border financial fraud to increase profits.Then,according to the characteristics of construction contract accounting,the author analyzed the authenticity of the profits of the case company using the method of financial analysis.The conclusion was that the Pakistan Multan Project was likely a fictitious contract.And combined with the cash flow analysis,the company was in the condition of cash flow shortage and poor financial situation.Combined with accounts receivable,inventory and other important balance sheet items,the author presumed the fact of the financial fraud of the company.This article finally concluded that the virtual increase in business income of about 200 million yuan from the Pakistan project which was turned out to be a fake construction contract.The company falsely confirmed the main business income,virtually increased in accounts receivable that the company intended to cut off in the future period.The fake profits were mainly hiding in the account of inventory,in the form of completed and outstanding amount construction contract.It can be seen that auditors of the construction industry listed companies should focus on construction contracts.Inventory is often used as a false increase in profits of the fake profit pool.If a listed company's oversea profits from Cross-border business are strongly rotating during the recent years,and the rate of margin gross profit is significantly higher than the industry average level,we should cautiously be wary of that the listed company is likely to make cross-border financial fraud.