The purpose of capital verification system

The purpose of capital verification is to protect public investors by adding checkpoints and introducing third parties, and to prevent the promoters or major shareholders of the company from making false capital contributions. The assumptions are as follows: first, whether the shareholder's capital contribution is true can be verified, that is, as long as the provisions on capital verification are observed, the shareholder's false capital contribution behavior can be found; Two, the accounting firm will be independent of the client, in strict accordance with the auditing standards to fulfill their obligations, to disclose the false capital contribution found. The reason why legislators have so much confidence in accounting firms is that it is easier to stop the illegal activities of accounting firms than to stop the false capital contribution of shareholders. Because the income obtained by shareholders through false capital contribution is large and difficult to stop, and the income obtained by accounting firms engaged in false capital verification is small and easy to stop, it is possible to curb shareholders' false capital contribution behavior by stopping the illegal behavior of accounting firms. Accounting firms have two blocking mechanisms. First, the violation of regulations by accounting firms will lead to civil, administrative and even criminal liabilities. Second, accounting firms are credit institutions, which have invested heavily in credit, and once they violate the rules, they will lose their credit investment. For fear of legal liability and loss of credit investment, accounting firms will remain independent and will not be bought by customers.

In reality, a large number of false capital contributions by shareholders show that these two premises are invalid in many cases. First of all, the capital verification procedure can not always identify the false capital contribution behavior of shareholders, and the capital verification rules themselves have technical limitations. Before the company was registered, the company did not exist, and the physical objects and non-patented technologies contributed could not be delivered, and the transfer registration of intellectual property rights and land use rights could not be completed. Therefore, the capital verification report cannot reflect whether the non-cash contribution is in place. The Statement of Independent Auditing PracticeNo. 1-Capital Verification tries to solve this problem, which stipulates that "if the state requires to go through the formalities of property right transfer within a certain period of time, but it has not been done at the time of capital verification, the certified public accountant shall obtain a commitment letter signed by the audited entity and its investors to go through the formalities of property right transfer within the specified period, and reflect it in the explanatory paragraph of the capital verification report." In this way, the capital verification agency is relieved of its responsibility and throws the risk to the public. Because the public usually doesn't know the specific content of the capital verification report, and there is no measure to ensure that the investor will fulfill his promise. If the investor's promise is really so reliable, there is no need to verify the capital. For the verification of the value of non-cash contribution, as mentioned above, it is mainly based on "second-hand information" such as evaluation conclusions. If the "second-hand data" itself is defective, the reliability of the capital verification conclusion is questionable. Therefore, even if the capital verification institutions strictly follow the auditing standards and do their due professional care and attention, it is difficult to avoid the occurrence of false capital contribution. At best, the function of capital verification is to improve the reliability of capital contribution information, rather than the absolute guarantee of capital contribution facts. There is a huge gap between the public's expectation of capital verification and the ability of accounting firms to verify capital.

Secondly, the independence of accounting firms is also questionable. The limitation of capital verification technology alone is not enough to explain the phenomenon of false capital contribution by shareholders. Although the company has been established, there are no technical obstacles to the transfer of property rights with non-cash contributions, but there are still many cases of false contributions. For example, the 32% equity of Hubei Happiness Aluminum Co., Ltd. invested by Happiness Group in the rights issue of Happiness Industry in August 1998 has not been transferred by 200 1 year. Many technically simple capital verification projects, such as capital verification with cash contribution, also have false phenomena. Fuzhou Certified Public Accountants issued a false capital verification report for the cash contribution of Fuzhou Finance Bureau, the major shareholder of Minfufa, and Minfufa was one of them. Therefore, we have reason to suspect that in many cases, capital verification institutions have lost their independence. In fact, there have been many cases in which promoters or controlling shareholders collude with accounting firms and other intermediaries to make fraud. Taking "Maikete" as an example, the sponsors, securities underwriters, lawyers, accountants and appraisers of Maikete Company met together to discuss how to "package" the company's assets and financial situation in order to meet the listing standards, and carry out division of labor and coordination. In the end, with the cooperation of intermediary agencies, Maikete Company defrauded the qualification of issuing and listing through "fraud". In this case, accounting firms and other intermediaries have completely lost their independence.