Research On The Cases Of Accounting Information Disclosure Violation Of Kaidi Ecology Co.,Ltd.

With the rapid rise of the securities market,the relevant departments in China have been increasing the degree of supervision.However,accounting information disclosure irregularities still exist.For listed companies that violate the rules,the SFC will impose appropriate penalties,which gradually draws the attention of the whole society to the violations of accounting information disclosure of listed companies and other aspects.In the face of such a situation,China’s legal system has formulated relevant laws and regulations and punishment initiatives to regulate.However,the late start of our securities market and the lack of regulatory development in this area have left loopholes for some managers with bad motives for disclosure violations.The investment direction of the small and medium shareholders will be directly affected by the irregular disclosure behavior of the listed company.Besides,the order of the securities market will be disturbed to a certain extent,hindering the normal development of the capital market.In summary,this paper examines the case of Kaidi Ecological’s accounting disclosure irregularities,which is conducive to regulating the order of the capital market and protecting the vital interests of those involved.Kaidi Ecological was issued an investigation notice by the SFC on April 30,2019,for alleged illegal violations of accounting information disclosure,and a case was opened for investigation in accordance with the law.On October 31 of the same year,the SFC issued a notice related to administrative penalty and market entry ban against Kaidi Ecological.Kaidi Ecological violated the regulations by failing to account for the borrowing costs of the suspended power plant and inflating financial expenses and construction in progress in all three years of its financial reports from 2015 to 2017.Among other things,in 2017,Kaidi Ecological’s annual report contained false records of information disclosure.Kaidi Ecological has caused non-operating capital appropriation of 588 million yuan of funds with the controlling shareholder and related parties in the transaction of funds and failed to disclose it in accordance with relevant regulations,etc.In June 2018,Kaidi Ecological’s long-delayed 2017 annual report was finally disclosed,and the company posted a huge loss of 2.38 billion yuan in 2017.In July 2018,Kaidi Ecological was alerted to the risk of delisting and was placed under the ST cap.Since then,as of the suspension,Kaidi Ecological’s share price is only 0.15 yuan,and the market value has shrunk by more than 40 billion yuan.Nearly 80,000 stockholders lost an amount of 4.126 billion yuan.Based on the violations shown above,this paper analyzes Kaidi Ecological’s accounting disclosure violations using the fraud triangle theory.First,internally,the most direct reasons affecting Kaidi Ecological’s disclosure violations were its need to go public,the development and implementation of the company’s internal control system due to the pressures faced by the company’s subsequent operations,and the permissiveness of its board of directors.These provided room for Kaidi Ecological’s disclosure irregularities.In terms of the external environment,Kaidi Ecological is facing a variety of difficulties,and it is subject to the macroeconomic environment and the pressure of intense competition in the industry.At the same time,the quality of the external audits and the level of governmental penalties made Kaidi Ecological take a chance on the disclosure of accounting information by not disclosing truthfully.Based on the actual situation of Kaidi Ecological,this paper has developed a solution for its problems.To improve this culture of disclosure violations,the first thing Kaidi Ecological needs to do is to address the company internally and cut off the root causes that hinder this culture of disclosure violations.Kaidi Ecological must strictly and effectively implement the internal control system so that the role of the board of directors can be fully utilized.In a highly competitive environment,Kaidi Ecological cannot be opportunistic and has to continuously improve the competitiveness of the company.Then,the requirements for accounting firms must be to maintain quality and quantity and to enhance their professional skills training,which will lead to a continuous improvement in audit quality.Finally,government departments should also strengthen supervision and management and severely punish irregularities in disclosing accounting information.Preventing accounting information disclosure violations is a serious task,and every listed company should strictly follow the relevant laws and regulations to ensure the interests of investors.A good capital market environment needs to be maintained by many parties so that the capital market can be better developed.The innovative point of this paper is that it can apply the factors of pressure,opportunity,and excuse in the fraud triangle theory,combine the actual case of Kaidi Ecological Technology Co.,Ltd.and analyze the whole process and causes of its accounting information disclosure irregularities in-depth,and give practical countermeasures that can be carried out in accordance with the actual situation of the company,which provides guidance and reference for the solution of the problem of accounting information disclosure irregularities of the whole listed companies in China.