The Research On Audit Risks Of The 3D Printing Listed Companies In China

More and more cases of auditing failures have drawn the attention from experts in audit industry about the audit risks these years. In the mean time, it is going to be more necessary for looking into the auditing risks and accumulating the experience in 3D printing industry with more backup from government and more projects of audit. Audit risks controlling becomes more important especially for High-Tech companies. Therefore, the current destination is to study the main audit risks of 3D printing suppliers and specify the suggestions for risk controlling. This paper aims to analysis the audit risks of these kinds of companies with the case study of a 3D printer listed company, which may leads to some constructive advices about audit risks controlling strategies in this field.With the characters of higher efficiency of production,3D printing is a new type of manufacturing industry which is also called addictive-manufacturing. But because of the early period and the special manufacturing methods in 3D printing industry, some relevant researches are less and the difficulty of auditing is bigger. Thus, there is an urgent need of research on some audit-related issues of 3 D printing industry for the theorist, and some ways and procedures of auditing should be worked out for a healthier development in 3D printing industry.Because of this, the paper has contained the case study of a 3D printing listed company and the analysis of audit risk, which leads to some suggestions for facing the current problems. Therefore, the innovation of this paper is the audit risk research for the new industry and some auditing experience in 3D printing companies. The limitation of the paper is mainly caused by the less research about on 3D printing and industry 4.0, less data from both the 3D printing industry and the companies. The paper is made up of five parts. They are the introduction, the concepts and definitions, the audit risk analysis of 3D printing listed companies, case study of the audit risk analysis, suggestion and conclusion.The first part of the paper:After doing analysis about the background and significance of the paper, some relevant literature reviews have been worked out. To sum up, the foreign researchers consider that 3D printing will be promising for manufacturing revolution, while the Chinese researchers pay more attention on the new method of manufacturing and find some threats from the new technology. Besides, the research on audit risks has been started much earlier in foreign countries, which also has influenced some policies, while Chinese researchers improved the theories of audit risks based on the foreign researches.The second part of the paper:Apart from the above, some relevant concepts have been defined in order to make the research more clear. The concept and characteristic of 3D printing has been introduced, and so were the definition and model of audit risk. Besides, the definition of Audit risk is quoted from the definition suggested by China association of certified public accountants in 1996. The model of audit risk in this paper is based on the one offered by IAASB in 2003.The third part of the paper:After introducing the current situation of audit in 3D printing industry, it is believed that audit risks of this industry should be researched and some specific suggestions should be provided. With the analysis of Audit risk, there are about three concerning points of the risk of material misstatement and two points of detection risks in 3D printing industry. Among of the above, the risks of material misstatement are mainly caused by the characters of 3D printing industry, the weak corporate governance and a lack of compliance or standards. Besides, the detection risks are mainly caused by less experience of auditing in this industry and less targeted constrains for this industry from the accounting standards.The forth part of the paper:Based on the comparative analysis of relevant companies, the risks of material misstatement and detection risks have been figured out. Especially, the case study on the Shining 3D which is a typical example of 3D printing industry leads to some useful results. With the Risk-Based auditing method, some audit risks of Shining 3D have been found and evaluated. The risk of material misstatement is caused by some high risk assertions and the defects of internal control. The main assertions of high risks are the occurrence and the cut-off of revenue, the accuracy of gross margin, the occurrence of R&D and government subsidies, the pricing and allocation of inventory. Besides, the ownership concentration, the qualification of independent directors and the resignation of the directors are studied for the statement level of material misstatement. While the detection risks are mainly caused by the lack of professional knowledge of 3D printing and not diligent enough for auditors and the defect of the current standards.The fifth part of the paper:Having figured out the concerning points and the audit risks of 3D printing industry, the paper offers some advices for audit institutions and auditors, the clients and the regulators. Audit institutions and auditors need to conduct in-depth analysis of 3D printing industry to develop measures for risk controlling apart from the necessary audit process for high risk assertions. Facing different applications in 3D printing industry, auditors should develop targeted audit plans. Improve the professional quality of the auditors and require for professional skepticism throughout the audit projects. Regulators need to establish trade associations to provide auditors with reference to the fair value measurement indicators and industry standards. It is also necessary to refine the accounting standards for science and technology enterprises in R&D expenditures and capitalization conditions. Audited enterprises should further improve the corporate governance structure with a good foundation to finish the audit project.