Fraud refers to doing things that violate the law and discipline by deception, including all the ways that people can imagine to gain benefits by making false reports. Fraud is generally divided into two types: fraud against organizations (enterprises) and fraud against organizations (enterprises). The most common fraud in enterprises is financial reporting fraud. This paper will focus on the main manifestations and hazards of corporate financial reporting fraud, and put forward some superficial views on preventing and stopping fraud, and discuss with peers.
First, the main manifestations and harmfulness of corporate financial reporting fraud
Fraud in enterprise financial reporting mainly refers to intentional fraud by enterprise management authorities. The main purpose is to reduce liabilities and expenses by inflating assets, income and profits, whitewash the operating results of enterprises, deceive investors and creditors and seek personal gain. Mainly manifested in: ① The financial reports provided to the finance and taxation departments and banks are inconsistent. At present, this phenomenon is quite common. Financial reports provided by enterprises to finance and taxation departments for seeking financial subsidies or tax relief and financial reports provided by banks for seeking loans will reflect different data such as sales revenue, profits, inventory, accounts receivable (payable) and so on. (2) fabricating false profits to defraud the listing qualification, so as to deceive investors and circle money. Enterprises want to qualify for listing, and they will not hesitate to falsify their financial reports. For example, according to a case published by an accounting firm in Chengdu, an enterprise in Chengdu said in the application materials for stock issuance and listing that the annual profit of 1996 was 54 million yuan. It was verified that the enterprise falsely reported the profit of1570,000 yuan and the actual loss of 1996/0/030,000 yuan by means of fictitious product sales, inflated product inventory and illegal accounting treatment. 3 falsely reporting profits and exaggerating performance. This phenomenon is particularly prominent in state-owned enterprises. Driven by utilitarianism, some management instigated the preparation of false financial reports to defraud fame and fortune in order to improve their political achievements, reputation and influence.
Fraud in corporate financial reports is very harmful, and the wrong information it creates will seriously mislead all kinds of decision makers to make wrong decisions; False profit and loss reports drain state assets, infringe on the legitimate rights and interests of shareholders, creditors, customers and employees of enterprises, and cause huge losses to their economy. Moreover, the amount involved in the falsification of corporate financial reports is often shocking. For example, Xerox enterprises in the United States falsely reported revenue of $6 billion in five years; During the period from 1998 to 200 1, China Yinguangsha Group accumulated fictitious sales income of 1049626 million yuan, underestimated expenses of 49.4534 million yuan, and inflated profits of 7715.67 million yuan. These frauds involve a huge amount of money, which not only does great harm to society, the state and individual investors, but also may cause the public to lose confidence in listed companies, intermediaries and even the entire capital market.
Second, the causes of corporate financial reporting fraud
Everything has its subjective and objective reasons, and corporate financial reporting fraud is no exception, mainly including:
(A) the expansion of selfish desires, lack of morality
The motives of fraudsters are directly driven by their own internal motives, and they commit intentional illegal and criminal acts for a certain purpose. The most typical driving force comes from the pressure brought by the expansion of selfish desires. The selfish desires here include the need to improve political status and the possession of economy. Some enterprise managers, in order to exaggerate their work performance and thus enhance their political status, force enterprises to fabricate false financial reports, making financial reports not only of economic significance, but also of political significance. At the same time, as one of the elements of society, people also have various needs. In addition to the legitimate economic needs needed to maintain a normal life, some people make ends meet by pursuing a luxurious lifestyle, bad hobbies or improper relationships between men and women. Such demand needs the support of a lot of economic resources. When a person's needs exceed his own conditions, serious selfish desire expansion and moral deficiency are enough to prompt fraudsters to commit fraud.
(B) the system is not strict, and the punishment is not enough.
Cheaters can cheat because they have a chance. Here "machine" has two meanings. First, there are loopholes or defects in the control system (measures), so it is difficult to prevent and find fraud. To make false accounts, counterfeiters must first identify the loopholes or defects in the control system (measures); Secondly, whether the accounting control system is strict or not can make its fraud leave no trace and not be discovered. The second is to give the management of some enterprises too much power. Once power is out of control, it will create conditions for crime. Fraud in financial reporting is generally instructed by the management and decision-making levels of enterprises, and implemented by financial personnel, such as overestimating inventory value, confirming income in advance, concealing disclosure of important matters, etc. Only the management and decision-making level of the enterprise have the right and conditions to do it. If fraudsters lack the conditions of "opportunity", they cannot implement it. In addition, poor punishment also makes fraudsters unscrupulous and daring. At present, the relevant laws and regulations applicable to financial reporting fraud are not clear, which makes the cost of fraud far lower than the income; The punishment for financial report fraud is not enough, and most of them are mainly administrative sanctions and fines, which makes the law lack sufficient deterrence.
(C) defects in the regulatory mechanism, the concept of integrity is not strong
Under the condition of market economy, it is instinctive for enterprises to pursue profits, and it is inevitable that violations will occur, but it is necessary to establish an effective supervision mechanism to correct them. However, there are still some defects in the current supervision mechanism. For example, in taxation, media, politics and law, banking, auditing and other regulatory systems. No matter from the standpoint of the country or the enterprise, when the interests of management and investors conflict in the financial reporting supply chain, some regulatory agencies have not really established the concept of protecting the interests of investors and the concept of honesty to the country, enterprises and individuals. For example, the disclosure of the accounting fraud case of Enron in the United States makes people question the integrity of the audit. Honesty is the same for enterprises and individuals. Keeping promises, stressing credibility, emphasizing loyalty and abiding by professional ethics are the lifelines for the survival and development of enterprises and individuals. The current social structure is diversified, especially influenced by unfair distribution, inequality between the rich and the poor, money worship, hedonism and other factors. There will inevitably be dishonesty at all levels of society. If there is no concept of good faith, it is possible to cheat by hook or by crook for various motives to achieve their different interests.
Three, enterprise financial reporting fraud prevention
We know that if fraud cases occur, the negative impact on society and the losses to the country, investors and creditors are immeasurable. Whether there are anti-fraud measures has a great impact on the losses suffered by the country or enterprises. Therefore, in anti-fraud measures, we must first prevent fraud. The prevention of financial report fraud in enterprises is mainly to ensure the normal, orderly and safe operation of enterprises by improving internal control system, strengthening legal deterrence, establishing diversified supervision mechanism and strengthening professional ethics education, so as to successfully realize various objectives of enterprises.
(a) establish and improve the internal control system, increase the punishment for violations.
First of all, perfecting the system is the basis of preventing fraud, and it is also one of the means to eliminate fraud opportunities. System is not only a code of conduct for people, but also a social incentive mechanism. The imperfect system provides convenience for fraud, and only the internal control system that meets the requirements can provide reasonable guarantee for preventing fraud. To prevent fraud, we must first establish a sound internal control system, mainly from the following aspects:
1. Establish a good internal control environment. For enterprises, a good internal control environment should not only cultivate employees' self-control consciousness, including cultivating employees' integrity and good ethics, work ability and business style, but also establish mutual control mechanism among employees, management, employees and management, establish clear organizational structure and effective internal audit, and create a good working environment.
2. Establish an effective accounting system. An effective accounting system can provide audit clues so that fraud can be found or difficult to cover up. It is necessary to establish an effective, timely and complete accounting system to distinguish real fraud from unintentional mistakes.
3. Establish appropriate control procedures. Appropriate control procedures can reduce the chances of fraud, and enterprises should establish control procedures to provide physical control of assets, an appropriate authorization system and a clear division of responsibilities.
Secondly, increasing punishment is the guarantee to prevent fraud. It is necessary to distinguish different responsible subjects, strengthen responsible persons, clarify the standard of responsibility sharing, and punish fraudsters. Clearly distinguish the applicable standards and scope of laws and regulations, and impose economic penalties on counterfeiters not only according to accounting law, but also relying on the power of law. Those who resort to the law will never be soft, and those who pursue civil and criminal responsibilities will never be tolerated. Give full play to the respective binding force of laws and regulations, and play a role in cracking down on a handful and educating a large number.
(2) Establish a diversified supervision mechanism and give full play to the role of various functional departments.
1, give full play to the role of government functions. The market economy cannot be separated from the control of the government, which is a "visible" hand. In today's world, there is no pure market economy without any government supervision, and there is no planned economy without any market mechanism. If there are frictions in some national policies and regulations, some enterprises will have the opportunity to exploit loopholes and have time to exploit them. The government should cultivate a good regulatory environment, improve the market mechanism and legal system, purify the legal environment, and use the power of law to prevent fraud.
2. Strengthen the independent audit function. China's audit structure consists of state audit, private audit and internal audit. The focus of national audit is the audit of government macro-management departments and national key construction funds, and the supervision of enterprises is not strong. The employment and employment relationship between private audit and the audited enterprise makes it difficult to give full play to the independence and authority of audit. Therefore, it is necessary to further strengthen the independent audit function. The author thinks: ① Independent directors and audit committee should be introduced, and the relationship between audit committee and board of supervisors should be handled well. Because all enterprises in our country have internal audit institutions, but their duties are only to conduct internal audit of subordinate departments or units according to the arrangement of enterprise management, and they are not independent enough to effectively supervise enterprises. The introduction of independent directors and audit committees will help to change this situation. (2) Strengthen the independence of CPA's auditing, so that the professional services provided by CPA to the same enterprise do not overlap; Not working in the employed enterprise; Maintain economic independence, not subject to enterprises and so on. At the same time, it is necessary to strengthen the legal construction and supervision of CPA audit.
3. Strengthen the internal supervision mechanism. It is necessary to establish a sound corporate governance structure, realize the control of senior executives over management, strengthen the responsibility of senior executives, restrain their behavior, strictly disclose information and strengthen information symmetry. Establish a mutual supervision mechanism or set up a hotline for reporting, so that fraudsters are always in the consciousness of "someone is watching me" and play a role in preventing fraud.
(3) Strengthen honesty education and establish a good social atmosphere.
Social atmosphere and working environment have certain influence on the breeding of fraud. If there is a serious credit crisis in society, and the working environment is full of fraud, power and money transactions, corruption and bribery, it will breed the soil for making false accounts and issuing false financial reports. Therefore:
The whole society should establish a good atmosphere and form an atmosphere of mutual trust. At present, "the phenomenon of accounting fraud is widespread, the problem of audit integrity is severe, and the crisis of accounting audit integrity has become a serious social problem". To create a good social atmosphere and win the public's trust, we should start from the individual, and everyone should do their "duty" work in a down-to-earth manner, instead of prevaricating with expedient measures or trying to test the bottom line. Only by implementing the principles of credibility and honesty can we establish an environment of public trust.
Enterprises should strengthen honesty education and create a positive working environment. Under the condition of market economy, enterprises should strengthen moral construction and honesty education. Only the subtle honesty education can make morality play a role, so that employees can not lose their way when they encounter huge economic benefits and serious moral and legal norms. It is necessary to formulate a scientific system, implement an open policy, publish a code of conduct or ethics, and require employees to strictly abide by it, so that systems and rules can play their due roles.
Four, the enterprise financial report fraud inspection
The inspection of fraud mainly includes discovering fraud and investigating fraud. Because fraud is an imperceptible illegal and criminal act, it usually takes some time from planning to implementation to being discovered. Therefore, the inspection of corporate financial reporting fraud needs to start from the following aspects:
(1) Understanding and evaluating internal control
Internal control is an important factor to prevent fraud, but the failure of internal control caused by imperfect internal control and negligence of employees will provide opportunities for fraudsters. When checking fraud, we should know, test and evaluate whether the internal control is reasonable and effective by asking relevant management and employees and taking some data for compliance test, and pay attention to possible fraud signals or signs, such as imperfect accounting system, great pressure on management, incomplete vouchers and records, few people making business or financial decisions, and lack of necessary control and supervision, which all indicate that there are loopholes in internal control, which are clues that need attention in fraud inspection.
(B) sensitive analysis of enterprise management
1, related party transactions. At present, related party transactions include related party purchase and sale, entrusted operation, capital exchange and cost sharing. It is the management that uses related party transactions to cover up losses, mostly for the purpose of adjusting profits. When investigating fraud, we should carefully look for related parties and their transactions, straighten out the property rights relationship of the whole listed enterprise, carefully check the minutes of the meeting of the enterprise, and ask the management strategically, especially at the end of the year. Related party transactions are often used to whitewash the financial situation and operating results, which is an important fraudulent way for enterprises to improve their image or reflect the management's operating performance. In addition, it should also analyze whether the transaction price of related parties is reasonable and whether the transaction (transfer) with subordinate subsidiaries or shareholders is normal.
2. Recognition of income. Check the invoice stub and delivery voucher, check the accounting records of large or abnormal transactions, verify major transaction contracts, and analyze whether there is fictitious income. Whether there is a way to falsely report income by confirming income in advance or recording false transactions, so as to achieve the purpose of inflating profits and exaggerating performance.
3. Changes in inventory. Inventory is often used to manipulate the cost of the main business, so as to achieve the purpose of inflating or reducing profits. Therefore, we should pay attention to the abnormal changes of inventory, master the cost accounting data of inventory, and conduct on-the-spot inventory when necessary to verify inventory.
4. Adjustment of future events. Focus on the analysis of whether there are major undisclosed afterwards events in the enterprise. Check whether there are any false transactions recorded at the beginning of next year to cover up the false records of last year; Whether there are major events such as merger and liquidation in the balance sheet in the future; Whether there is any material inconsistency between the accounting statements and other information disclosed at the same time.
(3) Spot-check important accounting data
Accounting records and related original vouchers are one of the carriers of fraud, and fraud usually leaves traces in related accounting materials. In fraud inspection, important accounting data are selected for verification and analysis to find fraud signals. For example, check whether the accounting basis of "deferred expenses", "deferred assets" and "other receivables" is sufficient and reasonable, and whether it is amortized according to the income period, so as to verify whether the enterprise has falsely listed the current management expenses and operating expenses in the above subjects and not included in the profit and loss. At the same time, check whether the general ledger is consistent with the subsidiary ledger. For receivables and payables, we should also get to the bottom of it and thoroughly understand its content and nature.
(4) Consultation
In addition to understanding and evaluating the internal control system, grasping relevant evidence and finding out weak links, fraud inspection should also find the breakthrough point to find fraud through consultation. To check whether there are inflated profits or real losses in an enterprise's financial report or whether it deceives investors by concealing profits, it is necessary to verify with government departments, industry directors and banks to understand their production capacity, production scale, operation and financial status, whether there are asset restructuring and related transactions, and to verify whether there are inflated profits such as fictitious sales revenue, less transfer of sales expenses, and less or no mention of bank loan interest. Whether there are hidden profits such as unrecorded sales revenue, fictitious costs and fictitious liabilities.
In today's society, most economic illegal and criminal activities such as corruption and bribery, tax evasion and misappropriation of public funds, as well as a large number of corruption phenomena, are inseparable from making false accounts. The phenomenon of enterprise accounting fraud has been repeatedly banned, and every exposure of false financial reports has dealt a heavy blow to investors' confidence. Eliminating fraud is a long-term and arduous task, which requires the full cooperation of all walks of life, a fair, reasonable and harmonious environment and the support of honest personal quality.