Research On Audit Risk Of Related Party Transactions

In recent years,the scandal of financial fraud exposed in China’s listed companies has become increasingly frequent,in order to cope with the fiercely competitive capital market and expand their own market scale,these listed companies have adopted a variety of financial fraud methods,and related party transactions are one of the most important financial fraud methods.Related party transactions are a double-edged sword,on the one hand,listed companies in the process of development through the use of joint ventures,joint ventures,enterprise mergers and other ways to expand,the formation of related party relationships for related party transactions,thereby reducing transaction costs,optimizing resource allocation,and promoting the rapid realization of economies of scale;on the other hand,this kind of transaction method will provide convenience for listed companies to occupy funds,manipulate profits,and damage the rights and interests of small and medium-sized shareholders because of their own concealment and complexity.For certified public accountants,if the listed company does not disclose related parties in the financial statements and intentionally conceals related party transactions,it will bring difficulties and risks to the audit work of the certified public accountant,resulting in audit failure,so that the accounting firm and the certified public accountant are punished by the CSRC.At the same time,this will also greatly restrict the future healthy operation of the securities market,reduce the value and quality of accounting information,and affect the public’s trust in the auditing industry.However,as far as the current situation is concerned,it is still difficult for certified public accountants to find that listed companies are concealing related parties or concealing related party transactions during the audit process.This study aims to put forward relevant countermeasures and suggestions for audit practice through theoretical analysis and case analysis,and provide relevant practical guidance for certified public accountants to avoid risks in auditing related party transactions.This paper takes the theoretical analysis as the starting point,expounds the theoretical overview of related party transactions and related party transaction audits,and analyzes the current status of existing research results.Then the case of Guangdong Rongtai is introduced for analysis,and then the reasons for the failure of the Pearl River audit are analyzed.Finally,it is concluded that how to avoid audit risks in the audit business and control audit risks within a reasonable range.This includes maintaining a professional skeptical attitude,making reasonable use of professional judgments,identifying and assessing the risk of material misstatement of related party transactions,responding to the risk of material misstatement,and what improvements should be made in industry supervision.