Research On Financial Fraud Behavior And Countermeasures Of Huanrui Century Based On Crime

With the rapid development of the capital market,more and more cases of financial fraud have been exposed.Financial fraud has become an "evil sore" that affects the healthy development of the capital market and greatly affects the sustainability of the global capital market.The CSRC issued 371 penalties in2021,showing that financial fraud remains a major disaster area.With the rapid development of the film and television industry,the industry continues to explode,such as Let V was exposed as inflated income,large amount of related party funds occupation and other problems;Huayi Brothers was exposed as "stealing accounting concepts",and a number of film and television enterprises were exposed as financial fraud,among which "inflated income","funds occupied by related parties" and "high accounts receivable" were the most common problems.This article takes Huanrui Century as a research case,in December 2016 Huanrui Century was successfully listed through the backdoor Xingmei joint listing,in November 2017 it was investigated by the CSRC for suspected false information disclosure,in November 2019 it was administratively punished by the Chongqing Regulatory Bureau of the China Securities Regulatory Commission,and then because the "former actual controller" continued to face the problem of equity pledge default,there was a risk of being forced to liquidate,and adopted the method of changing the "actual controller" to isolate the risk of shareholders from the company’s risk.Huanrui Century’s financial fraud was carried out under the leadership of the "former actual controller" and jointly implemented by the internal personnel of the enterprise and the external intermediary agency.In order to meet the listing requirements before listing,the operating income is confirmed in advance;In order to fulfill the performance commitment after the listing,the financial data was whitewashed by financial fraud means such as fictitious receipt of receipts and deferral of the recognition of bad debt provisions.This paper uses THE CRIME theory to sort out the basic situation and counterfeiting facts of Huanrui Century from the five dimensions of counterfeiters,counterfeiting means,counterfeiting motives,regulatory mechanisms and final results,and finds that:(1)In terms of counterfeiters,the actual controller is "dominant" and the lack of morality of senior executives is an important factor causing financial fraud in Huanrui Century;(2)In terms of fraudulent means,Huanrui Century’s fraudulent means include early recognition of revenue,fictitious collection of accounts receivable and under-mention of bad debt provisions,concealment of related party capital occupation,etc.;(3)In terms of the motivation for fraud,the motivation of Huanrui Century’s financial fraud mainly includes meeting the needs of listing and the pressure of performance commitment;(4)In terms of regulatory mechanisms,the failure of internal control,the collusion of intermediary institutions and the weakness of government penalties are important factors for Huanrui Century to successfully implement financial fraud;(5)In terms of final results,huanrui century’s implementation of financial fraud not only led to penalties and prosecutions for its relevant entities,but also led to a sharp decline in stock prices and a shrinking market value.In addition,from the four perspectives of listed companies,intermediaries,regulators and investors,countermeasures to prevent financial fraud are proposed,with a view to improving investors’ risk identification ability and contributing to the healthy and orderly development of the capital market.