Chinese Law Prof Blog

Editor: Donald C. Clarke
George Washington University Law School

Friday, February 8, 2013

Accounting fraud in China: here's how it's done

With Caterpillar's $580 million write-down on its acquisition of a Chinese company whose books turned out to be less than totally reflective of what was really going on, accounting frauds are in the news. Here are two good sources on how it's done:

The main point here is that Chinese accounting scandals generally don't involve complex schemes to dress something up as something else; they usually just involve out-and-out lying and deception, such as saying you have cash when you don't, or claiming that you just got a huge order from a customer when the supposed customer doesn't even exist.

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