Research On Audit Response To Agricultural Listed Companies With Financial Fraud

Financial fraud of listed companies in the stock market is very common, but over this years, capital market of China has accumulated outbreak include Yinguangxia, Lam shares, Fengle Seed, Green Earth from the agricultural sector, such as25listed or from continuing operations during the post-marketing fraud serious cases. Agricultural listed companies as the leading modern agricultural enterprises have become the capital market in financial fraud-prone areas, the fundamental reason is mainly the agricultural industry with its unique fraud conditions. Agricultural listed companies operating range always is involved in business activities of "farming", so there are many other industries particularity in agricultural industry. For example, possession of biological assets that listed companies in agriculture own in a large proportion of the total assets in the inventory verification audit process will bring great difficulties; agricultural production and business activities of listed companies are often severely affected by natural conditions coupled with the tendency of government policies, taxation concessions and other reasons, there are many non-operating income or expense in the agricultural listed companies; agricultural activities listed company trading partners also tend to involve a lot of farmers customers, and the use of cash for transactions circumstances exists. Therefore, agricultural listed company’s business flow and cash flow can not exist in other industries such as bills of exchange and certificates specifications and so on which provide convenient conditions for agricultural listed companies financial fraud. With financial fraud because of some of internal problems in addtion audit practice needs more improvement.This paper chooses the A-share listed companies of2010-2012financial data and audit opinion data as the data window from the empirical point of view to verify whether the auditors pay enough attention to audit risk arising from the agricultural sector specificity. This paper makes the empirical analysis in two levels with audit fees as a dependent variable. The analysis concluded that the agricultural industry on the audit fees correlation coefficient is positive at the5%level significantly, indicating that auditors in the audit of agricultural listed companies due to the agricultural sector, there are many favorable conditions of financial fraud, the audit body gives more audit efforts to agricultural industry compared to other industries. Secondly this paper investigates the effect of various risk control variable of agricultural listed companies on audit fees, there is no significant correlation between the variable of receivables and Inventory accounted for the proportion of assets and audit fees, indicating that auditors in the audit of agricultural listed companies do not pay attention to matters of accounts receivable letter consultation process, which is a measure of the company four indicators of operational risk:the current ratio, financial leverage, ROE, whether there is loss in three years, only loss and audit fees appear significant positive correlation at the5%level in the company three years, consistent with the hypothesis. Through the analyses of Impact on audit fees in the verification industry through various risk control variables, auditors do not give more industry particularity attention to auditing the various economic sectors of agriculture matters listed companies, the audit did not take into account the main business of the special nature to develop and implement the corresponding audit procedures, therefore auditing is prone to failure, audit subject need to improve their knowledge of audit practice when auditing agricultural listed companies. The auditors should develop and implement effective audit program to learn the lessons of audit failure which has occurred, and update professional knowledge to keep the industry prudence, enhance their professional ethics, adhere to an independent audit principles issued by the proper audit reports to meet the needs of the audit business development. Performing this auditing services can meet the needs of development. At last this paper summarize and analyze agricultural tools of financial fraud, which made the appropriate way to deal with the audit. This study will contribute to improving the audit regulations, guidelines and audit approach system and improving the status of agricultural listed companies to maintain the normal development of the capital markets.