Case Study On Financial Fraud Of Kang Mei Pharmaceutical Co., Ltd Based On The Theory Of Fraud Risk Factor

In recent years,the financial fraud of listed companies is frequent,which has become a cancer of the social reputation of Chinese enterprises.The outbreak of financial fraud in Kang Mei pharmaceutical,Kang De Xin and Fu Ren pharmaceutical has a serious negative impact on the capital market,further challenging the authority of the regulatory authorities in China.In view of the frequent frauds of Listed Companies in the pharmaceutical industry in recent years,the Ministry of finance of China organized some supervision bureaus and finance departments(bureaus)of provinces,autonomous regions and municipalities directly under the central government to conduct spot check on the authenticity of accounting information of 77 randomly selected pharmaceutical enterprises from June to July 2019.It shows that China will pay more attention to and supervise the quality of accounting information in the pharmaceutical industry.Continuous profits and good market credit are the foundation of financing of listed companies.However,many managers just ignore this point and are accustomed to using the beautified financial statements to gain the trust of investors.The particularity of the industry,such as the relatively scattered pharmaceutical market,the large proportion of biological assets,which are not easy to confirm and check,the trivial and complex sales links,and the relatively difficult supervision,creates an opportunity for the financial fraud of the industry.According to the investigation of CSRC,Kang Mei pharmaceutical used various means to commit financial fraud.In 2016,2017 and 2018,the monetary capital increased by 22.58 billion,29.94 billion and 36.19 billion in turn,reaching 88.7 billion in total,three times of the company's net assets,which is equivalent to that Kang Mei pharmaceutical made three frauds in three years.The nature of the consequences of the fraud is as the spokesman of the CSRC said: "the impact is extremely bad and the consequences are extremely serious.".This paper takes Kang Mei pharmaceutical financial fraud as a case study,on the basis of studying the relevant theoretical literature of financial fraud at home and abroad,using the risk factor theory,taking prevention as the starting point,through the combing and analysis of the case,analyzes the means,motivation and impact of Kang Mei financial fraud,and finally analyzes the listed enterprises themselves,the intermediary institutions related to fraud,and the outside world The Ministry of supervision and administration of the people's Republic of China gives suggestions on how to prevent financial fraud for pharmaceutical companies such as Kang Mei pharmaceutical and even listed companies.After studying the financial fraud cases of Kang Mei pharmaceutical industry,this paper concludes that: first,Kang Mei's financial fraud,as a listed company in the pharmaceutical industry,has its particularity,various means of fraud,huge amount of money involved in the case,resulting in more serious impact and worse consequences.Secondly,driven by the ambition of stakeholders,there are sufficient motives and reasonable opportunities.The consequences of fraud are not easy to be exposed.When the punishment is relatively small compared with the amount of fraud,enterprises are easy to commit financial fraud;Third,the financial fraud of Kang Mei pharmaceutical industry has a lot of negative effects on its investors,capital market,enterprises and companies in the same industry.Fourth,the prevention of financial fraud of listed enterprises needs to be based on the right medicine.It is a long way to go from the internal,intermediary agencies,regulatory authorities,the public and other aspects of sustained joint efforts.