Category: Money tips Release Date: 2007-07-31
China's listed companies can be described as wave upon wave of accounting fraud scandals, the endless. From the manipulation of profit to sales of counterfeit documents, from the related-party transactions to the occupation of the majority shareholder funds, from the false to mention less depreciation of fixed assets investment to the Western capital markets, a common means to cook the books almost all be "transplanted", also produced many "Chinese characteristics "cook the books techniques. Unfortunately, the Chinese media reports of listed companies cook the books most of which also remain on the surface level, very few listed companies, from a technical level, to expose the specific means of fraud. As an ordinary investor, how to maximize the use of their available information, see through a conspiracy of some unscrupulous companies cook the books? In fact, as long as with simple accounting knowledge and investment experience, through the analysis of the financial statements of listed companies, and many false accounts means can be seen through, or at least can cause investors wary. We analyze the company's financial statements, we must have each year longitudinal comparison, but also the company's horizontal similar comparison, only in comparison we can find questions and loopholes. Now the network is very developed, over the years a listed company's annual reports, quarterly reports can easily be found, trouble is how to determine "the same company." "Peers" In addition to our analysis of the company must have the same core business, the asset size, capital structure, and historical background is also more similar to the better; contrast to the more see through the greater the probability of false accounts.
1, the largest source of false accounts: "Accounts Receivable" and "Other receivables"
Each one will have a large number of modern industrial enterprises, the "accounts receivable" and "Other receivables" mainly refers to loans receivable, and other receivables refers to amounts of other exchanges, it is most convenient to do cook the books faster methods. In order to raise profits that year, a listed company with associated companies or affiliates to conduct credit transactions (the so-called associated enterprises refers to the relationship with the listed companies equity companies, such as parent companies, subsidiaries, etc.; affiliated companies refer Although there is no equity relationship, But the very close relationship between enterprises). As the name suggests, since it is credit-market transaction, will not generate cash flow, it will only affect the balance sheet and profit and loss account, and never will be reflected in the cash-flow statement. Therefore, when we see the balance sheets of listed companies on a large number of "accounts receivable", profit and loss on a huge increase in profits, but the cash flow statement does not appear when the net inflow of large amounts of cash, they should start alert: This company is not in the use of credit transactions to manipulate profits?
Credit transactions will not be a very long life cycle, the general recovery of the purchase price of industrial enterprises are less than one year cycle time too long bad loans receivable would be included in the ranks, affecting corporate profits, so companies usually the next one year to credit deal to solve out. The solution is simple - to affiliates or affiliated companies to return the goods to fill in a return documents, the deal did not happen is equivalent to the previous year's balance sheet and profit and loss account should be subject to the amendment, but this is for the investors have been too late. An analogy that a car company claimed in 2004, sold 1 million cars, earned 10 million dollars profit (of course, balance sheet and income statement would be an indication of credit sales), which makes it Shares climbed all the way; By the end of 2005, this car suddenly claimed that in 2004 the company sold 1 million vehicles have been returned, and the previously announced 10 million dollars of profits should be abolished, the share price will surely plummet, the lack of vigilance of investors certainly suffered heavy losses. In the West, experienced investors are relatively abundant, this little trick deceive the market; but in China, not only lack of experience of ordinary investors, institutional investors, analysts and securities media tend to lack the appropriate level, a similar trap also cook the books really fool many people.
More serious illegal operations, it is a fictional accounts receivable, false sales records do not exist, this is beyond the ordinary "to manipulate profit" category, a downright fraud. Year's "Guangxia" and "Zhengbaiwen" was once a fictional accounts receivable due to be sentenced to heavy penalties. In the "Darman" false accounts of major events, "a fictional accounts receivable" also played an important role.
Accounts receivable mainly refers to the purchase price, while other receivables refers to amounts of other exchanges, which can be entrusted financial management, which can be some short-term borrowing, may also be using some amount of intangible assets and so on. Let us stand on false accounts of the business perspective, "other receivables" and is clearly more difficult to manipulate than the "accounts receivable" must be low, because the "accounts receivable" is money, after all, the need to physical, physical Sale documents have been found to the possibility of fraud is relatively large. Other receivables, in the fraud with relatively easy and relatively arbitrary valuation, it is not easy to Louchumajiao. With the Guangxia and Zhengbaiwen fictitious sales records have been found in a lesson, and later of the counterfeiters tend to a more secure means of forgery; "other receivables" is to go without leaving a trace a trace, except to send professionals to conduct a detailed investigation it is difficult to capture conclusive evidence. For service enterprises is concerned, since the sales are not products, of course, there can be no "accounts receivable", If you want to cook the books, only in the "Other receivables" on the tricks. In China's stock market, "other receivables" high number of companies really do cook the books have been identified trivial for others.
For a perspective, many of the company's high "Other receivables" is not entirely fictitious profits, but the result of major shareholders occupy the results of company funds. As early as 2001, China's listed companies conducted a large-scale clean-up efforts in arrears, most of the arrears are large shareholders, the results of misappropriation of funds, and most of the "other receivables" in the name into the accounting records. Although the major shareholders of listed companies misappropriation of funds have long been regarded as China's stock market's stubborn disease, and was repeated orders from an inventory of regulatory authorities, but so far still no cure in sight. In the current model of corporate governance in China, the largest shareholder is really easy to enterprise funds; this is not the strict sense of the false accounts, but it is certainly a violation.
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