Research on the Collaborative Development Path of Enterprise Internal Control and Risk Management

Abstract

Grounded in the fraud triangle theory, this case study systematically examines the motives, opportunities, and self-justification mechanisms behind Taiyuan Heavy Industry's financial fraud. It reveals how the company, driven by performance pressures and governance deficiencies, systematically engaged in long-term fraudulent practices through methods such as premature revenue recognition, manipulation of completion percentages, and underreporting of expenses. The research further highlights ethical misconduct by management and the board under the frameworks of expectation theory and stakeholder theory, as well as the severe negligence of auditing institutions in maintaining integrity, objectivity, and professionalism. The case demonstrates that financial fraud is not merely a technical violation but a comprehensive outcome of governance failure, supervisory gaps, and ethical collapse. Finally, the paper proposes governance recommendations from multiple dimensions including corporate governance, industry regulation, and audit quality improvement, providing insights for building a credible capital market system.