Discussion On The Reasons And Governance Of Financial Fraud In HS Dairy Industry Of Listed Companies

With the continuous improvement of China’s socialist market economic system,enterprises are facing new opportunities for development.Benefiting from the good market operation environment,especially the healthy and stable financial market environment,it provides great convenience for enterprises to exchange and trade with each other.It should be said that the good order of the financial market has stimulated the vitality of enterprises.However,it should also be noted that in recent years,financial fraud incidents of listed companies occur frequently,which not only makes enterprises self-sufficiency,but also has a negative impact on the financial market environment.The main harm of financial fraud of listed companies is that it seriously damages the interests of market investors and destroys the order of financial market.What is more serious is that financial fraud will seriously affect investors’ confidence in the market and seriously threaten the healthy and sustainable development of the national economy.Financial fraud refers to the fiction and tampering of financial reports by enterprises in various ways for various purposes in order to safeguard their own illegal interests.Financial report is the "physical examination form" of the listed company’s operation.Investors can get timely and accurate information about the company’s operation through financial reports.However,in view of the existing management system of Chinese enterprises,investors do not directly participate in the operation of the company,while managers,as executives of the operation of the company,may provide untrue financial statements to the market for their own benefit.On December 16,2016,Hunshui Company put forward a short selling report on HS Company,a large dairy enterprise which took the lead in realizing milk source in China,and considered that the value of HS Company was close to zero.Then,in December of the same year,the agency put forward a short selling report,in which it found that HS Company had falsified income,shareholding price plunged and after that.The continued facts prove the rationality of the empty report.However,from 2014 to2016,KPMG,one of the four major international firms providing audit services,issued three consecutive years of unqualified audit reports.The financial fraud of HS company has aroused widespread concern of the society,and also has a certain representativeness.HS company is one of the listed companies in China.Under the strict financial supervision system of listed companies,it should strengthen internal management,especially financial system management,abide by various laws and regulations,operate in good faith,in order to return the investmenttrust of shareholders.However,HS company not only failed to meet the most basic requirements,but also tried to use various means to avoid the review of relevant institutions,and sometimes even resorted to financial fraud to deceive the market.HS company’s financial fraud is not a case of listed companies’ financial fraud,which is representative to some extent.In order to analyze the purpose and means of HS company as a listed company fraud and its consequences,at the same time,it also provides some reference for the analysis of other similar listed companies’ financial fraud.This paper attempts to analyze the background,motivation,means and consequences of financial fraud in HS company by case analysis,taking the financial fraud incident of HS company as an example.The main logic of this paper is: Firstly,it focuses on the related concepts and theories of financial fraud,focusing on the causes of financial fraud of listed companies and the internal and external conditions of financial fraud.At the same time,it also classifies the financial fraud means of listed companies,so as to screen the financial fraud means in future practice.Then,it reviews the financial fraud of HS Company and makes a thorough and detailed analysis of the whole process.Finally,we can get inspiration from the financial fraud cases of HS Company,and put forward preventive strategies from the internal level of enterprises,government,financial audit institutions and so on.To sum up,through the analysis of this paper,we find that financial fraud of listed companies is a relatively complex process,which not only involves the loss of control of internal management of enterprises,but also closely related to the loopholes in the financial market environment and the lax performance of accounting and auditing institutions.Therefore,in order to effectively prevent financial fraud,especially the occurrence of financial fraud in listed companies,it is necessary not only to strengthen the internal financial system management of listed companies,improve the professional ethics of practitioners and enhance the performance level,but also to strengthen supervision and improve the legal system by the relevant external agencies.Through internal and external joint efforts,we can prevent financial fraud similar to HS company.Once again,we should jointly safeguard the harmony and stability of our socialist market economy and embark on the road of sustainable development.