Research On Financial Fraud From The Perspective Of Internal Control

After more than 30 years of leap and rise in China’s securities market,the profit-seeking nature of the capital market has been fully released and embodied,and incidents of financial fraud regarding listed companies have become more and more frequent.According to the "2022 Global Fraud Survey Report" released by the American Association of Certified Fraud Examiners(ACFE),the direct economic loss involved in fraud cases exceeds USD 3.6billion.The report through the industry authority is enough to prove that financial fraud is one of the important factors affecting the economic order,and the act of financial fraud will not only cause huge losses to the majority of creditors and investors,but also make investors and the public lose confidence in the capital market and cause a crisis of trust.On April 11,2022,due to the false records and inaccurate disclosures in the 2016-2019 annual reports of Xinjiang Tongji Tang Health Industry Company Limited(hereinafter referred to as "Tongji Tang"),the China Securities Regulatory Commission(CSRC)gave the Decision on Administrative Penalties,and on July 7 of the same year,due to the failure to disclose the periodic reports within the statutory period,the Company’s stock was terminated and delisted.Through an in-depth study of the financial fraud of Tongji Tang,it was found that the failure of the company’s internal control system provided a "breeding ground" for the financial fraud.This paper analyzes Tongjitang’s financial fraud from the perspective of internal control,and uses the literature research method and case study method to conduct a comprehensive analysis of Tongjitang’s financial fraud.First,the literature on financial fraud and internal control is sorted out and summarized,followed by an analysis of the relationship between internal control and fraud theory;second,this paper analyzes the basic situation of Tongji Tang and the facts of financial fraud,and analyzes and summarizes the means of financial fraud and the consequences generated by Tongji Tang.Finally,based on the perspective of internal control,we give preventive measures against the phenomenon of financial fraud in Tongji Tang.The study found that the financial fraud occurred in Tongji Tang was due to the failure of its internal control system.Therefore,a sound and perfect internal management system can play an effective role in suppressing financial fraud,and scientific design and effective supervision can ensure the effective implementation of internal control,prevent the occurrence of corporate fraud,reduce audit risks,and further enhance corporate value.The case of Tongji Tang’s financial fraud is typical,and the impact of financial fraud on financial statements can be analyzed more thoroughly.It can play a reference role in financial statement audit risk prevention and the effectiveness of internal control of listed companies,which is conducive to the healthy development of enterprises and the securities market.