Zero tolerance to falsified financial reports

NEARLY HALF OF THE LISTED NON-FINANCIAL COMPANIES are suspected of fabricating their financial statements this year, including 98 of the 138 listed real estate companies, according to a recent report on the financial security of China's listed companies. Beijing Youth Daily commented on Thursday:

If what the report says is true, this year represents arguably the highest financial risk of Chinese listed companies in a decade. An earlier assessment of 20 State-owned enterprises by the National Audit Office found that 18 of them had lied about their revenues by fabricating more than 200 billion yuan ($30 billion) of income and 20.3 billion yuan in profits.

In fact, financial reporting fraud is not just the wrongdoing of a few companies but a prominent problem.