Impact Of Key Audit Matters’ Disclosure On The Information Content Of Audit Reports In Automotive Manufacturing Industry

The burgeoning of the auditing and CPA system was born out of the “separation of powers between the ownership and management rights of enterprises”.With the development of society,the auditors’ work plays an important role in maintaining capital market order,improving corporate accounting information’s quality,and preventing or detecting financial fraud.As the CPA’s final result of the audit work,the audit report can help the users communicate with the CPA.It enables the financial statement users to comprehensive the financial statements and make useful decisions.The audit report contains more information,which not only increases the public’s trust in financial statements,but also maintains the perfect development of the market economy.The audit report issued by the auditors under the old standards has the advantages of standard,concise and clear at the first glance.However,with the high-rapid development of economy,the financial reports of modern enterprises are becoming more and more complex,and the business operations are more diverse.The audit reports in standard formats are difficult to meet users’ expectations and needs due to the single information.Foreign organizations such as IAASB began to investigate and discuss how to expand the content of audit reports and increase the content of audit reports.Finally,in 2015,IAASB revised the old auditing standards,stipulating that under the new audit reporting standards,CPAs need to increase communication on key audit matters in the audit report,expecting to register through the audit of key audit matters in the audit report.The accountant can provide more targeted and personalized audit reports,making the audit report more relevant to the specific situation and characteristics of the audited enterprise,and to some extent overcome the shortcomings of the previously standardized audit report,so that the audit report information.The content has increased to help financial statement users obtain more effective information from audit reports,enhance understanding of CPA work,and increase public trust in financial statements and the work of accounting firms.In order to maintain international convergence,China approved the issuance of new audit reporting standards in December 2016,including the “China CPA Auditing Standard No.1504-Communicating Key Audit Matters in Audit Reports”.The new audit reporting standards will be implemented in China’s A+H stock companies from January 1,2017,and from the following year,listed companies in China will need to apply new auditing standards.The implementation of the 1504 guidelines in China for two years,it is meaningful to study whether it is possible to increase the information content of audit reports in key audit matters.At present,most of the research on the content of key audit matters and audit report information is mainly focused on the research of all A+H listed companies or A-share companies.The research on key auditing matters and information content of a certain industry is still less.This paper uses the method of empirical and case to analyze the disclosure of key audit matters and the information content of audit reports of listed companies in the automobile manufacturing industry,and expounds the disclosure characteristics of key audit matters of W company,to make suggestions.The content of this article mainly includes five parts.In the first part is the introduction,the author expounds the background and reasons for selecting this problem for analysis and research,and collates and summarizes related literatures at home and abroad,forms literature review and literature review,and introduces the research methods,research ideas,framework of this paper,expected contributions and shortcomings.The second part is the theoretical analysis part,which mainly expounds related concepts and theories,including key auditing matters,information content,information asymmetry,signal transmission theory,etc.,and introduces and combs related theories.The second part is the theoretical analysis part,which mainly expounds related concepts and theories,including key auditing matters,information content,information asymmetry,signal transmission theory,etc.,and introduces and combs related theories.The second part is the theoretical analysis part,which mainly expounds related concepts and theories,including key auditing matters,information content,information asymmetry,signal transmission theory,etc.,and introduces and combs related theories.The third part expounds the revision of China’s audit reporting standards,statistics on the audited opinions and disclosed key audit items of listed companies in China in 2017,and describes the status and characteristics of their disclosure,and analyzes them through empirical research and excess returns.This part also analyzes the relationship between disclosure of key audit matters and information content in automotive manufacturing industry.The fourth part briefly introduces the key audit items and audit responses of the selected case W company,and uses the excess return method to analyze whether the key audit matters of W company affect the market reaction of users of financial statements,that is,whether the disclosure of key audit matters of W company increases the audit report’s information content.This part also combined with the industry disclosure status to analyze the characteristics of W company’s key audit matters disclosure,and introduced the reasons for the W company’s key audit matters’ impact information content.The innovation of this paper is that it studied the key auditing matters and audit report information content of the automobile manufacturing industry.The method adopted is empirical research plus case analysis.To a certain extent,it can not only supplement the current research on key audit matters.It is also possible to contribute to the improvement of information content in the disclosure of key audit matters by analyzing the case and presenting more targeted opinions and suggestions.