Company's Fraud Audit Research Based On The Related Party Transactions

With the rapid development of China's economy, coupled with the deepening and improvement of the stock market, a growing number of companies listed. And because of the fierce market competition, some enterprises began to embark on the path of consolidation, mergers and acquisitions to achieve better development. What followed was more and more affiliated enterprises and related party transactions, and the transactions were becoming more and more complicated, concealed. However, related party transaction has two sides, on the one hand to a certain extent, it can save transaction costs and improve operational efficiency, on the other hand, it can provide a means of financial fraud for enterprises. In recent years, the use of related party transaction fraud of listed companies occurred one after another, from the previous Fiberhome Technology to the later QiongMinYuan, New Earth, YaXin Chemical, ZiXin Pharmaceutical and so on. These fraud cases did damage to the interests of all stakeholders, and were not conducive to the healthy development of the economy as well.Through Jade Bird HuaGuang case analysis, related party transaction fraud and audit are studied in this paper. Direct cause of Jade Bird HuaGuang related party transaction fraud is to prevent delisting and cover up poor management facts, which is also an important reason for many listed companies to implement fraud. Jade Bird HuaGuang carried out fraud mainly by means of concealing equity transfer related party transactions, related purchase and sale transactions, etc. ZhongLei accounting firm as Jade Bird HuaGuang's external auditor didn't perform the audit successfully, and there were many audit problems. To solve these problems, this paper analyzes the reasons, and proposes recommendations from four aspects, including: designing scientific related party transaction audit procedures and methods, accounting firms should strengthen service quality control, improving CPA's professional ethics and professional competence, improving the regulatory system and increasing the intensity of punishment, etc.The innovation of this paper is that on the basis of theory and practice, the commonly used methods of related party transaction fraud, the content of the related party transaction audit and so on are summarized, and the main problems of the related party transaction audit currently are analyzed. Through Jade Bird Hua Guang case study, combined with normative analysis method, the motivation and means of the related party traction fraud are revealed, the audit problems and reasons are analyzed, finally the suggestions to strengthen the related party transaction audit mainly from the perspective of CPA audit and supervision are put forward. But the method of case study itself has some limitations, may not be broadly representative, the research needs to be improved. Also because of my limited ability and practical experience, the feasibility and effectiveness of recommendations put forward remains to be tested.