Research on Internal Control of Small and Medium-sized Enterprises – Luckin Coffee Inc., a Case Study

Abstract

How to make your personal finances soar and become rich quickly is probably

such a chance that everyone is thinking about and tries to snatch, while it is indeed a win- win situation for companies and shareholders to raise their share prices. On the other

hand, a reasonable and legal approach is particularly important to avoid illegal activities and fraud. Based on the fraud triangle theory, the paper adopts a combination of qualitative and quantitative research methods, analyses the causes of corporate fraud from the perspective of management accounting by analysing the financial fraud case of Luckin Coffee Inc. The paper is an exploratory case study and the researchers have conducted secondary research based on secondary data and literate. The paper aims to give a deep analysis on fraudulent means such as inflated operating income, inflated costs and expenses, and related party transactions through the specific case study of Luckin Coffee Inc. Despite reforms to the penalties for financial fraud, cases are still emerging, and the amounts involved are not insignificant, so, it is worth to find out what factors attract companies to take the risk. Finally, countermeasures and suggestions are put forward in terms of improving the internal control system of listed companies, the system of independent directors, and strengthening the supervision of third-party auditors. Suggestions are made to the judicial department and social supervision department, aiming to provide insights and references for the prevention and control of financial fraud of listed companies, so as to promote the healthy and orderly development of the capital market.