Financial Fraud Case Analysis On Fushun Special Steel Co.,Ltd.

With the continuous advancement of China's macroeconomic and financial system reform in the 1980 s,the capital market began to sprout and gradually began to develop.In the early 1990 s,the continuous expansion of corporate bond and stock issuance prompted the rapid growth of the parallel market.At the same time,with the support of national policies,the two stock exchanges in Shanghai and Shenzhen were established,and capital market took initial shape and began to grow and standardize in China for a long time.Although the emergence of the capital market stimulates the economic development,it is inevitably accompanied by the emergence of some problems,and financial fraud is one of them.Since 2000,Second-board Market,SME Board and New OTC Market have continued to fill the capital market.Meanwhile,the company's financial fraud problem has become more and more intense.Financial fraud leads to the distortion of accounting information,also seriously affects the orderly development of the capital market.It causes huge losses to investors,companies and even the country.Therefore,in order to protect the rights of investors and regulate the order of the capital market,it is significant to pay attention to the financial fraud.This paper selects Fushun Special Steel Co.,Ltd.as a sample case to study the financial fraud problem for three reasons.First of all,this financial fraud case involved a large amount of money and a long time,resulting in a bad impact.Secondly,because of its special enterprise nature.Before the assets reorganization of its major shareholder,Northeast Special Steel Group Co.,Ltd.,the actual controller of Fushun special steel was SASAC of Provincial Government.An enterprise,injected with state-owned capital,occurs financial fraud will not only make investors suffer losses,state-owned assets will also have the risk of loss.In addition,it is due to the importance of its industry and main business.As one of the pillar industries in China,manufacturing industry has a great impact on the national economy.As an irreplaceable production and R&D base of special steel materials in China,Fushun Special Steel Co.,Ltd.plays an important role in the national economy.In conclusion,the consequences of financial fraud in such a company can be imagined.Based on the theory of fraud risk factors,this paper analyzes the causes of financial fraud in Fushun Special Steel Co.,Ltd.,research on fraud means and signs,at last,puts forward the relevant governance and prevention suggestions.This paper mainly divides the research process into four parts.The first part is the introduction.Mainly from the perspective of introducing the research background and significance of financial fraud,related domestic and foreign research status and related theories involved in this paper.The research framework based on certain research methods is constructed to lay a theoretical foundation for the following analysis.The second part is the case introduction,the main content is the basic situation,means and recognition methods of financial fraud in Fushun Special Steel Co.,Ltd..The third part,based on the theory of fraud risk factors,analyzes the causes of financial fraud.It is found that the financial fraud of Fushun Special Steel Co.,Ltd.is caused by the following factors: the low company's personal moral quality and professional integrity;high performance pressure;single and centralized ownership structure;failure of internal control;inadequate external supervision;small punishment.The fourth part,based on the above research results,puts forward the way to deal with the situation of financial fraud.Based on the case study of the theory of fraud risk factors,this paper puts forward some suggestions on the governance of enterprises themselves,external regulatory agencies and other aspects.Specifically,enterprises should strengthen the construction of moral quality of managers and financial practitioners,and create a corporate culture of being self serving,honest and trustworthy;establish feasible strategic goals and appropriate legal development paths;improve the internal control system,strengthen the effectiveness of internal control implementation;strengthen the role of the board of supervisors and independent directors.In terms of external supervision,SASAC and CSRC at all levels should work together to strengthen supervision from different perspectives,such as improving supervision system,coordinating supervision power and innovating supervision methods.External audit institutions should also fulfill their duties and play their due supervision functions.Law is the last and most effective defense line.In view of financial fraud,the relevantlegislative organs should improve the legal provisions.On the one hand,weaken the fraud motivation caused by a single delisting system.On the other hand,increase the punishment to achieve the deterrent effect and reduce the occurrence of fraud.On the macro level,the state should further promote the reform of state-owned enterprises,in order to not only alleviate the lack of checks and balances caused by a single dominant force,but also improve efficiency and reduce performance pressure.At last,the paper puts forward the fraud identification method of selecting significant financial indicators to construct the linear Logistic regression model,which provides the financial fraud identification means for enterprises,and improves the practical operation of the research.