What is the difference and connection between financial fraud and financial statement whitewash

"Financial fraud" has been known to us since the late 1990s, and the U.S. Statement on Auditing Standards (SSA) No. 16 clearly states that fraud is the intentional preparation of false financial statements. China's "Independent Auditing Standards No. 8" defines fraud as an intentional act that results in an inaccurate reflection of the accounting statements.　　Financial fraud can be divided into management fraud and employee fraud according to the subject of fraud, and can be divided into malicious fraud and good faith fraud according to the purpose of fraud.　　Financial statement manipulation (a) Use of physical assets, equity replacement techniques to adjust profits This technique is usually used by listed companies and their parent companies or other related parties, who achieve the purpose of increasing profits through the replacement of physical assets and equity. For example, the resolution of asset exchange between Shimao Company and Shanghai Shimao Construction Co., Ltd. agreed that the company would exchange the 183,750,000 equity shares of Shanghai Shimao International Plaza Co., Ltd. and 67,920,000 yuan in cash with 500,000 yuan of equity shares of Shanghai Shimao Lakeside Real Estate Co. Such a replacement, the World Trade Organization shares in 2003 annual results year-on-year surge of 25 times.　　(B) the use of regulating non-operating income or subsidized income to whitewash the annual report This is the ST company's usual tactics. Non-operating income refers to the production and operation activities with the enterprise has no direct relationship with the various income, it is not generated by the enterprise operating funds spent, do not need to pay the price of the enterprise, in fact, is a kind of pure income, can not and do not need to match with the relevant costs. It does not have long-term and stability, the impact on profits is temporary, so, non-operating income often become profit "regulator".　　(C) the use of inventory value adjustment for profit manipulation First of all, the inventory valuation method is different, on the enterprise financial position, profit and loss situation will have different impact. The end of the inventory valuation is too high or the beginning of the inventory valuation is too low, the current earnings may therefore increase, and vice versa. Therefore, the change of inventory valuation method can produce a certain profit adjustment space. Secondly, some enterprises use the fixed cost method to calculate the cost of products, the product fixed cost differences in the products and inventory products apportioned between the products, but not apportioned to the products sold in the current period, in order to reduce the cost of goods sold in the current period. What's more, they intentionally list inventories falsely or conceal the shortage or destruction of inventories, so as to achieve the purpose of inflating the profit of the current period. Such practices, although the listed company's financial statements for the year look good, but for its future development prospects cast a shadow.　　(D) the use of reconciliation of accounts receivable, other receivables, other accounts payable to whitewash the annual report other receivables, other accounts payable is known as the accounting statement of the "trash can" and "treasure pot", the former to hide latent losses, the latter to hide profits. The annual report of the listed companies inaccurate in the receivables or other receivables, so as to achieve the purpose of inflated profits is not uncommon, some listed companies are often difficult to recover some of the receivables hanging on the books, in order to inflate assets.　　(E) the use of accruals combined with accounting estimates to regulate profits Enterprises huge secret provisions, so that the estimated accruals become a common means of manipulating profits. Secret provision means are generally the following: underestimation of assets, overestimation of liabilities, does not reflect the value of certain specific assets, put aside when the value of assets rise in the mechanism of adjustment.　　(F) the cost of "weight loss", profit "fat" Listed companies to adjust the current costs, but also to achieve the purpose of inflated profits. In practice, some companies tend to use "amortized expenses", "long-term amortized expenses", "construction projects" and other subjects to adjust the accounts, in the subsequent years gradually assessed, so as to achieve the purpose of smoothing profits. Thus, to achieve the purpose of smoothing profits.