The Study Of Financial Fraud Motivation And Governance Of Shandong Molong Company Based On The Theory Of Fraud Risk Factors

With the growth of China's market economy,the new capital market has developed rapidly,but some problems have arisen due to the lack of development and maturity.Financial fraud is one of the more serious problem,and more and more frequently,involving ever larger amounts of money and more fraud means.Financial fraud,although it is for the economic benefits to companies and related personnel involved in fraud for a short period of time,and it will eventually be punished by laws and regulations,which undermines the company image,lose credit,and strike the confidence of the investors,does great harm to the company.What's more,this has caused great losses to the relevant people,disturbed the market order,challenged the authority of the law,and obstructed the healthy and sustainable development of economy,so that financial fraud has attracted increasing concern and attention.Therefore,it is necessary and urgent to study financial fraud means,motivation and governance.This paper argues that the fraud motivation in the individual risk factors is the most important factor,so it is discussesd in the most detail.There are three main motivations: the first is to cover up the business dilemma,the second is to avoid to special treatment,the third is to the illusion of making a profit to obtain the bank loans,the fourth is that Zhang and his son as the main responsibility can gain significant benefits through fraud.Moral deficiency includes senior leadership and employee moral deficiency.This paper will take Shandong Molong Petroleum Machinery Co.Ltd.as an example.Firstly,the paper introduce the process of financial fraud and fraud means,then,based on the Theory of fraud risk factors from two aspects of the individual risk factors and the general risk factors to research the motivation for fraud.In the aspect of the general risk factors,the potential fraud opportunities is concentration of shares of large shareholders,the nonfeasance of the internal audit and the independent director.Another reason for the fraud was that the probability of fraud being found is low,because of the lack of supervision by theCSRC(China Securities Regulatory Commission)and the lack of diligence duty in the accounting firms.The final motivation is the punishment for fraud is very light.In view of the motivation of the fraud of the Shandong Molong,this paper puts forward the corresponding measures,and obtains the enlightenment to the whole industry to prevent and cure financial fraud.For shandong Molong,the first need is to improve the way of operation and enhance the competitiveness of enterprises to change the operating conditions,thus reducing the factor of fraud motivation.Secondly,it is necessary to strengthen the consciousness of corporate responsibility and strengthen the construction of enterprise culture.The third is to improve the corporate governance mechanism and clarify internal the supervision of responsibilities.The enlightenment of this industry is summarized into four aspects.The development of the first enterprise should be integrated into the development trend of the industry and improve the technological content of products.The second is to strictly abide by industry self-discipline,strengthen corporate responsibility and to promote vocational ethics;The third is to establish internal control system and improve internal supervision.Fourth,we should exert external supervision and increase the penalties for fraud.