Kangmei Pharmaceutical Financial Fraud Case Study

Financial fraud by publicly traded companies is a "cancer" of the stock market,severely damaging the fundamentals of the market and hurting investors’ interests.It has always been the focus and difficulty of supervision.In recent years,the China Securities Regulatory Commission has continued to increase its efforts to investigate and deal with vicious cases of financial fraud and market manipulation,effectively increasing the cost of violations of laws and regulations in the capital market,and strengthening the deterrence of regulatory law enforcement.For three consecutive years from 2016 to 2018,Kangmei Pharmaceutical carried out premeditated,organized and systematic financial fraud of about 30 billion yuan.The amount involved was huge,the duration was long,the nature was particularly serious,the impact was bad,and it seriously damaged the legality of investors.Equity and capital market healthy ecology.In November 2021,Ma Xingtian,the former actual controller of Kangmei Pharmaceutical,was sentenced to 12 years in prison,and11 other responsible personnel of the company,the accounting firm and 13 relevant responsible personnel shall bear the responsibility according to the degree of fault.On April 30,2019,Kangmei Pharmaceutical unexpectedly discovered that 30 billion yuan of funds had "disappeared." The work begins with an introduction to the industry characteristics of Kangmei Pharmaceutical’s location,the background to the case and the motivation for the analysis,fraudulent methods using Du Pont’s advanced analysis method and batch substitution method to detect Kangmei Pharmaceutical’s financial fraud,and found that between 2016 and 2018,Kangmei Pharmaceutical used counterfeit bank statements to increase the counterfeiting of the company’s deposits.vouchers to manipulate revenue,to manipulate the company’s share price through the accounts of public parties,increased cash by 88.7 billion yuan,increased revenue by27.5 billion yuan and profit by 3.9 billion yuan.In the transaction process,the internal control system is a mere formality,there is no external audit supervision and there are gaps in the government’s supervision of improving the internal control system of listed companies,strengthening the external audit of listed companies,and enhancing the state supervision and provision of listed companies.Fully play the role of social supervision Four aspects,make proposals to promote the securities market in order to adhere to the principles of openness,fairness,impartiality,honesty and reliability.The "Kangmei case" is second to none in the domestic capital market due to its large amount of money and secret methods.The fraud has a long duration,a wide range of involvements,and the cheating methods and market influence are bad.The case study is typical and representative.The first case after the establishment of the special representative litigation system for securities with Chinese characteristics is a landmark case with pioneering significance in the history of the capital market,and the demonstration is of great significance.