china-break-trace

name	china-break-trace
description	Forensic financial analysis for A-share companies. Identifies discrepancies, potential irregularities, and earnings quality issues in Chinese financial statements. Adapted from the original break-trace skill for CAS accounting and Chinese market red flags. Triggers on "A股财务核查", "财务异常", "forensic analysis China", "财务舞弊", "earnings quality China", or "investigate [company] financials".

china-break-trace

Purpose

Conduct A股财务核查 — forensic analysis to identify potential issues in Chinese financial statements.

Data Sources

Primary: iFind MCP (Tier-1 付费) / AkShare MCP (Tier-2 免费备选)

get_financials(ticker, "income")     → Revenue, profit trends
get_financials(ticker, "balance")    → Balance sheet anomalies
get_financials(ticker, "cashflow")   → Cash flow quality

Secondary Sources

• 巨潮 — filings, notes
• 审计报告 — auditor opinion, emphasis of matter
• 公告 — unusual transactions
• 证监会/交易所 — inquiries, penalties

Workflow

Step 1: Revenue Quality Analysis

Revenue red flags:

Indicator	Check	Red Flag
应收账款/收入	AR / Revenue	>40% or rising fast
应收账款增速 vs 收入增速	Growth comparison	AR growing >> Revenue
经营活动现金流/净利润	OCF / Net Income	<0.5 or negative
收入确认政策	Notes review	Aggressive recognition
客户集中度	Top customers	>30% from one customer
关联交易	Related party	High % of revenue

Revenue quality score:

Metric	Score (1-5)	Notes
OCF/NI ratio		5 = OCF >> NI
AR days		5 = low/stable
Revenue concentration		5 = diversified
Growth quality		5 = organic, recurring
Cash conversion		5 = excellent

Step 2: Profit Quality Analysis

Profit red flags:

Indicator	Check	Red Flag
营业利润 vs 净利润	Operating profit vs net	Large gap
非经常性损益	Non-recurring items	>20% of profit
政府补助	Government subsidies	High % of profit
资产减值	Impairments	Irregular timing
投资收益	Investment income	Unsustainable
毛利率趋势	Gross margin	Unexplained changes

Profit decomposition:

净利润 = 营业利润 + 营业外收支 - 所得税

分析重点:
1. 营业利润占比 (营业利润/净利润): 应>80%
2. 非经常性损益: 识别一次性项目
3. 政府补助依赖度: 补助/净利润
4. 减值损失波动: 是否平滑利润?

Step 3: Cash Flow Quality

Cash flow analysis:

Metric	Formula	Healthy	Concern
OCF/NI	OCF / Net Income	>1	<0.5
FCF	OCF - CapEx	Positive	Negative
OCF/Revenue	OCF / Revenue	>5%	<0%
投资活动现金流	Investing CF	Outflows (growth)	Large inflows (asset sales?)

Cash flow quality score:

Indicator	Healthy	Warning
OCF consistently positive	✓	Negative OCF
OCF tracks NI	✓	Large divergence
CapEx sustainable	✓	CapEx >> OCF
No frequent asset sales	✓	Asset disposal income

Step 4: Balance Sheet Anomalies

Balance sheet checks:

Area	Red Flags
货币资金	Large cash + high debt (possible restriction)
应收账款	Rapid growth, aging issues
其他应收款	Unusually large (possible tunneling)
存货	Rapid growth, no explanation
在建工程	Never completed (capitalized costs?)
商誉	High % of equity (>30%)
长期待摊费用	Unusually large
负债	Off-balance sheet items

Specific balance sheet ratios:

Ratio	Formula	Concern
有息负债/净资产	Interest-bearing debt / Equity	>100%
货币资金/有息负债	Cash / Interest-bearing debt	<0.3
商誉/净资产	Goodwill / Equity	>30%
其他应收款/资产	Other receivables / Total assets	>5%
存货周转天数	Inventory days	Sudden increase

Step 5: Related Party Analysis

Related party red flags:

Indicator	Check
关联交易金额	% of revenue/costs
关联交易定价	Arm's length?
关联应收应付	Balances with related parties
资金占用	Funds tied up with related parties
担保	Guarantees for related parties

Common tunneling mechanisms:

• 预付账款 to related parties
• 其他应收款 from related parties
• 资金拆借 without interest
• Asset sales to related parties at non-arm's length prices
• 担保 for related party debt

Step 6: Earnings Management Detection

Earnings management indicators:

Method	Detection
费用资本化	CapEx unusual, D&A low
收入提前确认	AR rising, 预收账款 falling
费用延后确认	AP falling, accrued expenses low
减值选择性计提	Timing of impairments
会计政策变更	Policy change benefits
估计变更	Reserve changes

Beneish M-Score (adapted for China):

Variable	Calculation
DSRI	Days sales in receivables change
GMI	Gross margin deterioration
AQI	Asset quality index
SGI	Sales growth index
DEPI	Depreciation index
SGAI	SG&A index
LVGI	Leverage index
TATA	Total accruals / Total assets

Step 7: Auditor & Filing Analysis

Audit report review:

Item	Review
审计意见	Standard / Modified / Adverse
强调事项段	Any emphasis of matter?
关键审计事项	Key audit matters
审计师变更	Recent change?
审计费用	Unusual changes?

Filing review:

• 年报 vs 中报 consistency
• Notes completeness
• Segment disclosures | Related party disclosures | Commitments and contingencies

Step 8: Regulatory Signals

Regulatory red flags:

Source	Signals
交易所问询函	Inquiry letters
证监会关注函	Regulatory attention
行政处罚	Fines, penalties
交易所纪律处分	Disciplinary actions
投资者诉讼	Shareholder lawsuits

Common A-share Fraud Patterns

Pattern	Description	Detection
虚增收入	Fictitious revenue	AR anomaly, tax mismatch
虚减成本	Understate costs	Margin anomaly
关联交易非关联化	Related party disguised	Customer/supplier analysis
资金循环	Round-tripping	Cash flow analysis
资产置换	Asset swapping	Unusual asset changes
会计估计操纵	Estimate manipulation	Reserve changes

Quality Checks

Before delivering report:

• All red flags investigated
• Evidence documented
• Severity assessed
• Conclusions supported
• Regulatory signals checked
• Report structured clearly

Data Source Mode Switch: Set env var IFIND_DATA_SOURCE_MODE to control data source preference.

• ifind-only (strict): Use iFind only, error if unavailable
• ifind-fallback (default): iFind preferred, fallback to AkShare
• akshare-only, wind-only (Wind only), wind-fallback (Wind first, fallback to iFind → AkShare): Skip iFind, use AkShare only