Identification of false accounting statements

Abstract This paper analyzes the causes of the present false financial statements, production methods and identification methods, based on false financial statements made to solve the problem of countermeasures.

Keywords: financial statements, accounting information; accounting integrity

Financial statements to investors on the market is an important source of business information, reflect the socio-economic and business management to the final result. False financial statements to investors the wrong information about the company, will lead to investor decision-making errors and, ultimately, investors and businesses and even national economic losses, so identification and prevention of false financial statements has become a top priority.


First, the causes of false financial statements

Read the financial statements of an enterprise is to understand the financial condition, operations, profitability levels of an important way. Companies making false financial statements the way, no more than three purposes: First, to deceive investors. Enterprises in order to obtain the reward or the trust of investors, financial statements often contain whitewash the motivation, and second, in order to obtain banking and commercial credit. Bank creditors and other financial institutions is bound to the release of credit risk from the perspective of control, unwilling to business losses, property security is not strong, providing companies with poor credit status of credit so that poor operating conditions and much-needed funds of enterprises, prone to manipulation of accounting information, accounting statements to gloss over the credit funds for financial institutions and suppliers of commercial credit of motivation and the third is to reduce taxes. corporate income tax in the accounting students on the basis of profit through tax adjustments, the accounting profit adjusted taxable income, multiplied by the applicable income tax rate to derive, so based on tax evasion, tax evasion, reduce or postpone tax purposes, companies will be to adjust the financial statements.


Second, the existing method of making a false financial statements

(A profit through the manipulation of processing losses. And the new accrual accounting system requirements, companies place the cost of the treatment should be handled in the current period through profit or loss immediately, but some companies to manipulate profits in order to achieve the purpose, it did not comply with the rules, through losses to reduce current costs, etc., in order to obtain inflated profits.

1, accounts receivable, especially long-term accounts receivable more than three years of losses. Receivables due to sales of enterprise products, providing services and other reasons, should the buyer or accept the services of the unit received the money, because it is the company's sales is the main business, the recoverability of accounts receivable therefore, a great impact on corporate performance.

2, long-term losses in construction, which is mainly reflected in the majority of enterprises in the self-constructed assets, will integrate into the outside part of the funds, while borrowing to be on time accrual of interest, according to the accounting system, this part of the loan interest in construction in progress did not apply before the completion of formalities should be capitalized if the enterprise rather than completion of construction for the completion of final accounts, the interest can be included in the cost of construction, so that the current cost reduction; on the other hand less depreciation, so can be two ways to inflate profits.

(Two changes to manipulate profits by way of depreciation of fixed assets depreciation correctly, the calculation of product cost (or operating costs, profit and loss will have a significant impact on the factors that affect the depreciation, the depreciation base of fixed assets two indicators of net salvage value is still relatively easy to determine, but in determining the useful life of fixed assets is more difficult to grasp on, many enterprises to take this issue, change the depreciation of fixed assets by way of earnings manipulation.

(Three non-recurring income through earnings manipulation
1, other business profits through earnings manipulation. Other business enterprises in the business process is the occurrence of some sporadic payments business, other business enterprises are not the main business, but for some companies, it's overall profit contributions are indeed "be extremely heavy hammer" effect.

2, through the investment income for earnings manipulation. Enterprises to increase through the distribution of wealth, or to pursue other interests, and transferring to other units of the assets acquired another asset, so the investment is usually part of the assets transferred to the enterprise other units to use, use by other units to create an investor's assets after the distribution of the benefits obtained, or by investing to improve trade relations to reap the benefits purposes.


Third, how to identify false financial statements

(A financial analysis. Financial analysis of listed company's annual report, interim reports and quarterly reports analyzing the financial reporting section, including three elements: financial report of the audit report, the accounting statements and financial statements.

1, the financial analysis of listed companies, the first financial report of the audit report to read the audit report is a certified public accountant whether the financial statements of listed companies to truly reflect its financial position, operating results and capital movements such as the audit opinion. Certified Public Accountants issued The unqualified audit report (both for investors is the greatest risk, because if it is being audited by the forged false documents, accounts table and CPA failed to find or simply driven by the interests of the CPA for directly involved in the fraud, they are presented unqualified audit report must be the most risk. Links to free download http://www.hi138.com
2, in the analysis of financial statements should be preceded by analysis of the accounting statements. Notes to financial statements are designed to help understand the financial statements report the contents of the relevant projects of explanation. It is mainly used by companies to explain the main accounting treatment, important items listed in financial statements a breakdown of data, etc. for listed companies by the major accounting treatment adopted, the change of accounting treatment, the reasons for change and the financial condition and operating results, which reflect the financial reports of listed companies to determine their financial condition and operating results and cash flows of the true extent of it is very important.

3, the financial analysis of listed company financial statements, including balance sheet, profit and profit distribution statement and statement of cash flows, according to financial statements data to calculate a variety of financial indicators.

(Two fundamental methods of analysis, including macroeconomic analysis, industry status and prospects of the company's position in the industry, senior management personnel management capabilities, the company's business strategy, the company's market share and reputation, etc. If a listed company financial statements is seriously out of macroeconomic performance and industry development, and the company's business strategy and management capacity, then financial statements from the macroeconomic situation and the serious development of the industry, and the company's business strategy and management of the office, should be Analysis of focus.


Main References:
[1] leaf love sticks. Whitewash report on the method of accounting recognition and countermeasures [J]. The charm of China, 2009.

[2] Wang Cuihong. Whitewash the motivation of accounting statements and countermeasures [J]. Modern shopping malls, 2010.

[3] Zhang Zhen. Whitewash acts to prevent financial statements Reflections [J]. China trade, 2010.

Links to free download http://www.hi138.com