A Case Study of Accounting Fraud Focusing onListed Agricultural Company in CHINA

[Purpose]The purpose of this study is to transparently analyze the accounting fraud of Company X by using the case of accounting fraud of Company X in China, and to prevent accounting fraud and suggest follow－up measures for Chinese agricultural listed companies. [Methodology]This study used the risk factor theory. In this study, we analyze the motives and means of accounting fraud of listed agricultural company X in China, and suggest prevention and follow－up measures accordingly. [Findings]Company X inflated its actual operating profit by adjusting its operating and non－operating expenses to avoid being delisted, thereby committing accounting fraud in order to protect its status as a listed company. We propose a customized proposal to prevent accounting fraud that occurred in this study. First, the delisting system should be scientifically introduced in the Chinese stock market in order to eliminate the motives of corporate accounting fraud. Second, the moral consciousness of the management of listed agricultural companies should be raised. Third, companies should establish a healthy management environment system, a scientific risk assessment system, and an efficient internal supervision system. Fourth, it is necessary to promote a subdivided organizational structure in the field of auditing by improving external auditing capabilities. Fifth, it is necessary to strengthen punishment for corruption, secure personal credit information, and strengthen administrative and criminal law enforcement power. [Implications]Through this study, by studying specific cases focusing on the risk factor theory of accounting fraud academically, it is possible to find out the motives for fraud in Chinese agricultural companies and to obtain advice to reduce fraudulent activities. There may be cases of accounting fraud similar to this study in Korea, so it is thought that we can refer to them and prepare for them.