The fraud behind the stock dark horse

—The audit case study of Qiong

Minyuan
 Structure
1 Background

2 Analysis

3 Punishment

4 Revelation
 Qmy’s background
•July 1988, established in Haikou
( Hainan minyuan modern agricultural
development co., ltd. )
•Sep. 1992, raise Legal person shares
30,000,000 shares.
( capital stock paid-up 30,000,000 )
•April 30, 1993, go public in Shenzhen
in the name of A share.
Analysis ： performance comparison
Total profit Retained earnings Capital
profits per share accumulation

1995 670,000 380,000 0.0009 44,170,000

1996 570,930,000 485,290,000 0.87 1,103,510,000

Growth 848.41 1290.68 962.33 657,340,000

multiples

540,000,000 is
fictional It is all imaginary
 Analysis—Excess profit growth
Explanation of company
The company achieves
great success in the
investment of the Beijing
strategic plan, which starts
and cultivates the new
profit growth point, and
ensures the company’s
sustainable profit growth.
Actual situation
The profit results from the
company signing invalid
state disapproval
cooperative house
building and right
transferring contract with
its affiliated company (HK
Guanlian real estate
company) and other
companies, without land
use right .
Analysis—Huge capital reserve
Camouflage
The reason why capital
reserve increases can be
referred to the explanation of
the reason that the
comparation of current
number and the number
before is more than 30%...
but it does not mention the
changes of the current
number and the number
before
The truth
The real reason is that
Qiong Minyuan made the
evaluation of the assets
which belongs to the four
investment projects under
no approval or
confirmation of the related
authorities.
 Punishment and Judgment
criminal penalties for
Qiong Minyuan company
penalties for the related
accounting firm
penalties for it's
controlling shareholders
one: Criminal responsibility
two :Re-regulation
One: Hainan the public
accounting firm (revocation)
Two: Zhonghua public
accounting firm (warning)
Three: Hainan Zhengda public
accounting firm (fine
of300000)
One: Fine
Two: Make administrative
punishment for its principal
Influence and Revelation
First: It has a great influence on Chinese
accounting history.
Second: It makes our corporation managers
and accounting workers realize the
importance of the legal obligations of
accounting, and opens a new chapter for the
legalization of accounting .
Influence and Revelation
Third: To improve the listed company at the
quality of financial disclosure, we need the
government, the listed company, the
information intermediary organizations’ joint
effort.
Last: Certified public accountant shall remain
independence, impartiality and accuracy in
the auditing in order to do the most effective
monitoring.
Thank you ~