Research On Prevention Of IPO Audit Risk

Chinese security market is rapidly developing in recent years, as for the corresponding regulatory environment is still not mature, accounting frauds often can be seen in the IPO process. Many companies got a sharp drop in revenue post-IPO, and the sharp decline in revenue has become common in the securities market. Financial frauds not only disrupt the order in the securities market, hamper the development of capital market, but also bring huge losses to Certified Public Accountants industry. Accounting firms would face punishment from the CSRC and lose the trust of the investors if the accounting firm failed in the auditing,which is an obstacle for the development of the CPA industry. In 2013, CSRC carried out the most severe financial verification so far, the accounting firms are facing more severe punishment on audit failure. It is a significant reality faced with certified public accountants and public accounting firms about how to improve the quality of auditing, reduce the risks in IPO, enhance the image of the CPA to help this industry develop healthily.This thesis is based on the IPO audit risk theory, analyzes the IPO audit risk from several perspectives. The case study is completed in the opinion of the CPA. First of all, the paper lists the audit risks happening in the process of IPO, analyzes the audit risks using the audit risk model, and identifies and accesses possible risks of material misstatement as well as detection risks. According to the risks those have been identified, the measures of preventing the risks can be given. Generally speaking, the prevention of risks is along with the IPO process in practice, however, it's also feasible to prevent the IPO audit risks according to the audit risk model in this case. In the end of the paper, I pointed out that the prevention of the audit risks can be improved, which is to say, we can make a sound quality control system of IPO auditing, as well as enhance independence, improve the vocational cautiousness and improve the IPO audit ability of the auditors to strengthen the prevention of IPO audit risks.