affiliated enterprises cannot borrow money from each other to prevent fraud.

listed companies will use the following related party transactions to fabricate profits. ?

1. Related party purchase and sale fraud

Related party purchase and sale fraud refers to the fraud of listed companies using the purchase and sale activities between related parties. According to the provisions of China's accounting standards, when there is a purchase and sale between a listed company and a subsidiary or a brother company, when there is a purchase and sale between a listed company and a parent company;

It needs to be offset in the consolidated statement. When the purchase and sale transactions occur, because the listed company provides a single statement instead of a consolidated statement, it cannot be offset. However, it is necessary to disclose the related parties and related party transactions in detail in the notes.

2. Entrustment fraud

Entrustment fraud is a new method of statement fraud, in which listed companies take advantage of the lack of regulations on entrusted operation in China to achieve the purpose of profit manipulation.

In practice, listed companies often entrust non-performing assets to related parties for operation, and charge high returns at the agreed price. In this way, it not only avoids the loss of non-performing assets, but also gains a profit out of thin air, and this return is often hung on the current account, and there is no real cash inflow, so it is just a false "statement profit".

3. Fraud in fund transactions

Although Chinese laws prohibit enterprises from lending funds to each other, there are still many listed companies that lend the funds raised to their parent companies or other related parties that are not included in the consolidated statements because there are no good investment projects, and charge the capital occupation fee at the agreed high interest rate, thus inflating profits.

4. Cost-sharing fraud

Cost-sharing fraud means that listed companies achieve the purpose of adjusting profits by manipulating the sales and management expenses that should be shared with related parties. There are often agreements between some listed companies and group companies on the payment and allocation of expenses, which has become a means for listed companies to manipulate profits.

extended information

enterprises and funds participating in lending activities must meet the following conditions:?

1. The enterprise that borrows and borrows funds must be a legal person with independent operation and accounting, with funds that can be independently controlled and used, and can engage in various economic decisions and activities, and enjoy a good reputation in society;

2. The enterprise with borrowed funds must have certain self-owned funds and practical repayment ability to ensure the repayment of principal and interest on schedule.

3. The funds lent by an enterprise must meet the following sources:

(1) The self-owned funds temporarily idle by various offices, companies and affiliated enterprises and institutions;

(2) Available special funds that were not used in that year:

(4) Temporary idle funds raised from various channels. Bank loans may not be lent.

4. The funds borrowed by the enterprise must be used in the following aspects:

(1) The bank has approved the technical transformation and project establishment of the loan, and before the bank loan has been issued, the enterprise can temporarily supplement it by borrowing money;

(2) 1% to 3% of the self-raised funds required for enterprise loans can be temporarily supplemented by borrowing funds when the enterprise has difficulty in raising enough funds at one time;

(3) Short-term working capital urgently needed by enterprises in production and operation;

(4) Some funds needed for technological transformation projects with low investment, high efficiency and quick results. The use of borrowing by enterprises should be mastered according to the above scope, and cannot be used for long-term investment in fixed assets, let alone lending for profit.

Baidu Encyclopedia-Corporate Capital Lending

Baidu Encyclopedia-Related Party Transaction Fraud