Research On The Risk Of Material Misstatement In The Audit Of Related Party Transactions

In recent years,with the rapid growth of China’s economy and the prevalence of mergers and acquisitions in the country,the number of related parties owned by large companies in our country has increased rapidly,the form of related relationship is complex and changeable,and the transactions between related parties are becoming more and more frequent and the transaction amount is significant.It can be said that related party transactions have played an important role in improving business performance and expanding strategic territory The important role of neglect.However,at this stage,the relevant laws and regulations and regulatory system for related parties and their transactions in China are not complete,so that criminals have an opportunity to engage in financial fraud in the name of related party transactions.For example,the fraud scandals of Zixin pharmaceutical,Huaze cobalt nickel and other listed companies in recent years can be found that there are many illegal facts,such as concealing affiliated enterprises,forging affiliated transactions,and illegal occupation of non operating funds by affiliated enterprises.Due to the special and hidden nature of related party transactions,and the fact that related party transaction fraud usually involves the joint collusion or careful planning of the enterprise management,it is often easy to become the blind spot of CPA’s sight and not easy to be detected,so the risk of related audit material misstatement also soars.In view of this phenomenon,this paper uses the research results at home and abroad for reference,introduces the related concepts of related parties and their transactions,as well as the risk of major misstatement faced by certified public accountants in the process of related party transaction audit.Then,on the basis of summarizing and analyzing the current situation of related party audit,this paper expounds how to effectively identify and evaluate the above risks from multiple perspectives.On the basis of following the auditing standards,combined with the relevant practical experience,this paper takes zhongxinghua accounting firm as an example,first explains the company’s background and the violation of related party transactions,and then uses the above principles to identify and evaluate the risk of material misstatement that auditors have to face in the fraud cases of related party transactions of silver based olefins.Finally,from the perspective of auditors and accountants,this paper analyzes the risk of material misstatement From the perspective of accounting firms,this paper puts forward some methods to deal with the risk of material misstatement.