Of financial fraud against the United States reflect

Paper Keywords: financial fraud, corporate governance of listed companies, management
Abstract: In recent years, U.S. companies in a series of financial fraud, exposing the United States, corporate governance, information disclosure, auditing and supervision loopholes and flaws. The U.S. government's response measures to solve the listed companies of fraud question provides a useful reference, it is worth our study and reflection.


Since last year, the United States continuously investigated Enron, WorldCom, Xerox, Merck and a number of listed companies in financial fraud. From the disclosure of the situation, Enron hide huge debts and false profits of $ 600,000,000; WorldCom misapplication accounting means to conceal the move billion expenditures; Xerox overstated operating income over the past few years, Research billion; Merck's 12.4 billion U.S. dollars false profits ... ... scale, the amount is huge, so shocked the world and promote people reflect on .

First, the causes of financial fraud
United States is a fairly complete legal system of countries, especially the U.S. market corporate law., Securities law, accounting law, over half a century has led the world kind. Legislative trends. Why should there be such a large scale financial fraud it ?
l, the imbalance of corporate governance
Corporate governance is the key to the board and the board must maintain a high degree of independence in order to effectively monitor managers. However, due to fragmentation and instability in equity, the general public and the shareholders can not be read together on the implementation of effective, making the shareholders of the senior management personnel monitoring efforts greatly reduced the formation of a "weak shareholders, strong management," the phenomenon. In many cases, the board influence and control by management. Board of lack of independence and the independence of the independent directors do not many listed companies in the U.S. exist. Enron, WorldCom, Xerox, Merck Although different means of forgery, but all the same nature - secret operations management company, do whatever they want.

2. The failure of internal control
Internal control including internal accounting controls and internal management control, it adopted the accounting and other business process control, help to reduce the occurrence of accounting fraud, which to some extent, accounting and other information to ensure true and reliable. Internal control system must have a strict accounting processes, audit the quality of professional accountants and independent exercise of the powers of the directors and supervisors, and neither is dispensable. However, from a practical situation, the internal control system in such fraud has become a decoration company. WorldCom's fraud problem is the financial officer of the company after leaving the business in a routine audit discovered.

3. External oversight of the out of control
U.S. corporate governance model is the traditional basis of a free economy developed, and is the main mode of external oversight. However, due to various factors. The U.S. government's regulatory capacity of the serious shortage of: �� in the United States, Companies from the state legislative power to enjoy. some areas to attract more companies registered in the state, to minimize the company registration requirements and Deregulation, corporate events of great freedom. U.S. company that features the legislation, making the government very weak supervision company, the objective for the operator to create illegal or facilitate illegal operations. �� lagging financial regulatory instruments, but also result in a major listed company financial fraud reasons: In recent years, the rapid development of capital markets and financial tools With the ever-changing financial development and complexity, so that the U.S. financial regulatory system had gradually reveal flaws and defects. how the changing environment in the strengthening of financial supervision, securities regulators in the United States faced new challenges.

4. Audit agency promises
In the scandal has engulfed the nation, the direct form of financial fraud is a listed company and the auditors, collusion, tampering with corporate profit reports, publication of false information, pushing up share prices. Ineffective defense system of independent audit, accountants are many people as accomplices of swindlers. which led to the biggest reason auditors dishonesty is the intermediary and the relationship between the interests of listed companies dictates. accounting firms account for customers to do the one hand, their audit on the other hand, while the provide audit and non-audit advisory services. like Arthur Andersen, as Enron this year to face millions of dollars can easily obtain the consulting business of large income customers, auditors dare to say "no" courage has nothing left . According to the survey, the three countries in the relevant independent accounting firm, from the business income of non-audit is audit income 2.9 times.

Second, the U.S. government to take countermeasures
Corporate scandals in the last city to grow bigger, the stock market suffered a serious setback in the background, July 26, 2002, the U.S. Congress overwhelmingly passed a package of accounting and corporate governance reform of Sarbanes-Oxley Act. The bill from the strengthening of information disclosure and accuracy of financial accounting, to ensure the independence of auditors, and improve corporate governance and other major aspects of the existing securities firms, and Xun taboo "degree for a major revision, and many new public companies, very severe law.

1. Strengthen the management of your office

Sarbanes-Oxley Act the most vibration can cause the contents of the business community is the responsibility of information disclosure of listed companies and listed companies, Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of the personal responsibility tied tightly together, asked them to form a special documentary evidence to ensure the company's annual and quArterly reports of its financial statements in the authenticity and accuracy, and take personal responsibility for this: this provision, the company behind the stealth wont, CEO and CFO are pushed to the front row, which greatly increased the legal responsibilities of senior management. reposted elsewhere in the Research Papers Download http://www.hi138.com 2. to strengthen the supervision of the accounting profession
Enron came to light, the SEC and Congress have been developed to strengthen accounting oversight regulations, strengthen the independent auditors of listed companies in the industry self-regulation. �� moral ten firms against external audit and internal audit to play a dual role to prohibit listing Meanwhile the company's independent auditors and the audit of the listed companies to provide non-audit services unrelated; �� establish audit committees, external audit solely responsible for hiring, firing, supervision and remuneration; �� create accounting regulatory committee for the executioner ten divisions Services The registration, inspection, investigation and punishment, to develop self-regulate; �� mandatory rotation. audit firm pArtner as the company's external audit period shall not exceed 5 years.

3 increased the penalties for violations
Financial Fraud angered the American society, the public generally requires "severe and fast" and sanctions violations against people. To righting a wrong, the Government response to public opinion, greatly improving the cost of financial fraud violations, increased penalties for illegal people. Sarbanes-Oxley Act, if there is breach, the CEO will face 10 years in prison and to add 100 million U.S. dollars to a fine reaction force, destruction of documents required for the federal investigation will be sentenced to 20 years, fraudulent investors limitation of action cases have also been extended.

Third, for Reference
Although China and the U.S. capital markets have a big gap, but at least one thing in common, that are facing serious accounting credit crisis. The United States after the occurrence of financial fraud, the government's response measures to solve the listed companies of fraud question provides a useful reference, it is worth our study and reflection.

1. Improve the corporate governance of listed companies
U.S. corporate governance and management, is often considered a benchmark model. However, a series of financial fraud scandals such as Enron tells us that any model is considered the most scientific of all need to constantly improve. In contrast, China. Jen City Corporation better corporate governance mechanisms need to be healthy and perfect. due to the dominance of domestic listed companies in a very serious problem, the reasons seemed more financial fraud. Therefore, due to the dominance and the stock market is not very standardized in the context of . First, to strengthen corporate governance of listed companies, establish a sound internal control system of checks and balances to maintain relationships within the company. proved that age if the company's senior management, members rights are effective checks and balances, will increase the difficulty of manipulating financial statements to help prevent and reduce lead-line is the incidence of securities fraud.

2. To maintain the independence of CPA Audit
The essential characteristic of the audit is that it's independence, lack of independence there is no audit. To maintain the independence of certified public accountants audit shall be from the following aspects: �� sound ten months up health division of the system construction, to reduce and eliminate accounting market administrative intervention; = 2 \ * GB3 �� to maintain the independence of the audit commission, cut off by the auditors with the audit of the company's interests, so that the link between the two soils did not matter; �� auditing and consulting services to implement separate operation. Although yet a large number of domestic accounting firms consulting business, but the regulatory authorities should take precautions as soon as possible the development of relevant management practices; �� rotation of the implementation of the audit of listed companies, accounting firms regularly mandatory replacement; �� constructing the chapter, to strengthen the registration the accounting profession's self-discipline and social regulation; �� enhance learning, to provide the CPA is also the quality and integrity to take seven consciousness.

3. To strengthen information disclosure of listed companies Bo
At present, the Public Company Accounting information distortion is severe, damage to the interests of investors, disrupted the social and economic order, must be to contain. �� listed companies improve financial and accounting regulations, standardize accounting information disclosure of listed companies, adequate, timely , objective and fair disclosure of the true and fair accounting information; �� increase the sheet information disclosure, improve the usefulness of financial reporting; �� standardize corporate governance information disclosure, improve the quality of information disclosure; �� strengthen corporate leaders, financial responsibility people listed companies to disclose the liability of the authenticity of accounting information; �� strengthening intermediary institutions (mainly CPA) on the supervisory role of accounting information.

4. To increase efforts to combat financial fraud
To effectively curb the behavior of listed companies, financial fraud, we must learn from the U.S. government regulation of accounting scandals of the countermeasures, "in times of trouble, with heavy penalties," Discovery increase financial bully who acts crackdown. (Working to develop and improve the fight against financial fraud Legal regulations (such as securities Civil Procedure, etc.), with judicial remedies to protect the interests of investors; ��) the cost of financial fraud. In the current constraints and anti-counterfeiting measures, the most powerful means is to increase compliance costs. only when the cost rose to an unacceptable violation when it could effectively curb the incidence of financial fraud. In China, stock market, the counterfeiters, often a fine of several hundred thousand dollars, mostly to administrative punishment instead of punishment. Compared with foreign punishment, the gap is still very large to achieve the purpose of effectively curb financial fraud; �� to increase and strengthen the financial fraud in the criminal sanctions, give full play to the law of criminal deterrence. Links to free papers download http://www.hi138.com