China's listed companies to explore the governance of financial reporting fraud means

Abstract: China's listed companies for the status of financial reporting fraud from the inside out to make a few ways of governance and measures that improve accounting standards, to improve accounting transparency; to strengthen supervision of listed companies outside the market; sound internal governance of listed companies, aims to In building a harmonious, transparent accounting environment.

Keywords: accounting transparency of listed companies regulated internal governance

First, improve accounting standards, to improve accounting transparency
1. To improve the accounting standards-setting process in the standard-setting before the public should have been open more relevant knowledge, especially the world of national and international standards committees mature experience, advanced practice, so that the public contact their actual understand the accounting standards and their corresponding interests; in the development process, should further expand the object and scope of the draft, especially the medium and small investors and stakeholders can be involved, to establish an open, systematic The comments system, to increase the transparency of standard-setting process; in the promulgation and implementation, the response to the implementation of the follow-up survey, focus on new guidelines to the impact of the public, while understanding the problems encountered in implementation of the guidelines to promote the full participation of accounting guidelines.

2 and improve the content of accounting standards system. To step up financial and accounting reporting standards development, implementation, in preventing financial reporting fraud is the basic premise in 2006, the newly promulgated accounting standards, has proposed the basic principles of financial accounting reports, but as a guide, completely changed the situation of China's accounting practice, slightly less than this paper that in the basic principles of financial accounting reports, financial reports should be clearly stated quality standards - accounting transparency transparency of the term was first by the U.S. Securities and Exchange Commission (SEC) made before the main Xiliweite Since then, SEC has repeatedly high-quality accounting standards issues, and transparency to be used as a core concept. transparency attention and research, to becoming the correlation another development and reliability study.

Accounting transparency of accounting information quality comprehensive and integrated requirements, focusing on high-quality standards, to the information users to make full use of on this, China's accounting standards, should provide a financial accounting reports to ensure quality standards, to reflect accurate, real, comprehensive financial information on the basis of accounting transparency to achieve the basic requirements to emphasize here that the following two implications: there must be a clear accounting standards for the guidance and strict compliance, that the majority of investors to provide timely and useful financial information; ensure that the financial information in an effective regulatory system and improve internal operating environment, play a role, to achieve accounting transparency.

Second, to strengthen securities market regulation, to ensure transparency in accounting
1. Establish a sound regulatory system. Rely on external regulation, to achieve transparent information, nor is it a quick fix. First and foremost thing is to have a sound regulatory system is currently monitoring the Government alone is not enough, we must with other level of supervision of the main organic combination form a SFC, the Stock Exchange, Securities Industry Association tripartite composition, functional complementation of the regulatory architecture to unscrupulous accounting practices in order to deter and prevent fraud.

Of course, as the stock market, the Commission legislative and law enforcement should focus on the protagonist's internal and external collusion and investigate cases of violation of regulations, generate enough power; Stock Exchange is responsible for daily supervision of information, the core by the Listing Rules and the Listing Agreement constraints listed companies should strictly enforce the accounting system; and the Securities Industry Association to fully play its role, the development of internal self-management regulations, accounting firms and other intermediary agencies strictly regulate, members of non-compliance punishable by appropriate penalties. The resulting regulatory system, block chances of listed companies, from organization to ensure the implementation of accounting standards, kill corrupt wind.

2 strengthen the independence of accounting firms the face of filling prominent Fraudulent Financial Reporting, to ensure the independence of accounting firms is crucial. In order to ensure service quality and authenticity of accounting information, can require listed companies to adopt mandatory to change the system, ie, the same audit unit only allows a certain period of employment, due for replacement, not due for replacement must disclose the reasons for the replacement, and after examination and approval departments shall not be replaced, because, if the CPA's long-term jobs and salaries over-reliance on a listed company, may occur between the complex interests, will meet some requirements of the customer's improper, to help them false, and not conducive to find some practice problems; In addition, may require Listed companies must disclose fees related to audit, on the serious charges than the Industry average behavior, give a reasonable explanation, thereby enhancing the quality of agency practice, give full play to the supervisory function, prevent and improve the transparency of information provided the most basic guarantee.

Third, improve the internal governance of listed companies, to create the internal environment of transparency

Links to free download http://www.hi138.com 1. Optimize the ownership structure. Shareholding structure is the internal governance structure of the foundation to establish a reasonable share structure, can solve the small shareholders of listed companies are inconsistent with the controlling shareholders conflict, effectively balanced distribution of information, reduce information asymmetry and improve the transparency of accounting information in China, most listed companies by state-owned enterprise restructuring, the high concentration, "internal control" is serious, it should reduce the proportion of state-owned shares to construct diversified ownership structure, and increase its liquidity, which is the most effective way to avoid the general meeting of shareholders "mouthpiece" of the situation, to avoid the management and ownership, regardless of ownership, part-time chairman, general manager, general manager of Directors long endorsement of the situation on the other hand, the reduction by state-owned shares, the state holding a number of industries that require listed companies, state-owned shares can find a reason for its managers, on behalf of its shareholders to exercise authority, the state-owned companies operating and management to ensure that state-owned assets in accordance with this target.

Therefore, the optimal ownership structure, in essence, control of the company in the process of distribution among different investors, in the process of individual investors should pay attention to the coordination of different interests, by virtue of holding power to prevent infringement of the interests of the other investors.

2 independent directors to play a supervisory role. First, we should increase the proportion of independent directors, strengthening the powers of independent directors to exercise, so that independent directors can be more in-depth company to understand the actual situation of the company, rather than mere managers reported material to make judgments, to give independent directors more more opportunities to participate in company management; Second, selection procedures, should be deprived of a large shareholder voting rights, cumulative voting by shareholders to elect representatives, rather than selected by the general meeting of shareholders; third, in terms of appointment, the independent directors in addition to professional knowledge and skills, but also respond to Industry developments, and other forward-looking strategic capability, is no longer a purely "scholarly."
3 to improve the incentives within the company. First, we must break the old state-owned enterprise managers appointed administrative system to establish a market-based to competency-based management, the selection from within the organization or directly from the external job market recruiting the right talent to serve on hiring managers are better ways. The second is to establish effective internal incentives, first to attach importance to the business managers to recognize their business can be an effective factor of production, the company's management implementation of the salaries of stock options is necessary to implement the stock option system, the company's operating management can focus more on the company's long-term development, to effectively prevent short-term behavior of enterprise managers, and to some extent, reduce the corporate management accounting reports of fraud, manipulation performance motivation. Third, in the design of internal incentive mechanism, enterprises should pay attention to short-term interests and long-term balance of interests, especially financial indicators and non-financial indicators combined.


References:
[1] Zhu Guohong. The dual governance of financial reporting fraud [M]. Beijing: China Renmin University Press, 2004.

[2] Qin Jiangping the accounting fraud and identification of market reaction: theoretical analysis and empirical evidence [M]. Economic Science Press, 2006.

[3] Ge Shu, Lin Zhijun Modern Western accounting theory [M]. Xiamen University Press. Links to free download http://www.hi138.com