Research On Audit Risk Of Related Party Transactions Of Listed Company In China

In recent years,many financial cheating cases of listed companies have occurred,most of which are based on related party transactions.Related parties artificially increase income and profits by using related party transactions,and deceive investors by making fraudulent financial datas,major shareholders also use related party relationships to embezzle large amounts of assets of listed companies,which seriously affects the operating and financial status of listed companies.Tax avoidance through related party transactions,which affects national taxation and damages market fairness.Complex related party transactions make auditing more difficult and greatly increase auditing risks.It is particularly important to study the related party transactions of the audited bodies,analyze the audit procedures and explore effective countermeasures to prevent the audit risks of related party transactions.Take Huaze Cobalt & Nickel as an example,Firstly,this paper analyzes the fact that related parties occupied non-operating funds by collecting financial data and company announcements.For example,The listed company’s assets were transferred through affiliated and non-affiliated third-party fictitious transactions.Related parties paid debts and provided large-scale guarantees.Secondly,lists systematically Ruihua Certified Public Accountants,unfit duty in the audit of Huaze Cobalt &nickel related transactions.For example,They did not fully perform identify related parties,operating effectiveness of control,test of details and analytical procedures.They did not keep professional scepticism during the audit.Finally,countermeasures for preventing and controlling audit risk of related party transactions are proposed,such as,auditors should implement adequately audit procedures and innovate auditing methods.Accounting firms should strengthen project quality reviews,and also pay attention to business training of employees.The audited bodies should establish a related party transactions risk assessment mechanism based on sound governance structure and the internal control system.The market regulator should tighten oversight,and fight violations of laws and regulations.