GEM IPO Auditing Risks And Countermeasures

Since the opening of China's Growth Enterprise Market,all types of small and medium-sized high-tech enterprises have met their financing needs through the GEM IPO and capitalized on the strength of capital to allow companies to achieve better development.However,GEM has brought considerable risks to the capital market as well.On the one hand,due to the characteristics of the conditions for listing on the ChiNext,the high-tech-based companies are facing greater technological iteration risks,while the smaller ones also mean that their limited ability to withstand the risk impact is limited.High growth and high risk characteristics.On the other hand,the companies listed on the GEM are generally lack of a sound internal control system,and there are also major problems in the corporate governance structure.There are more opportunities for financial fraud,especially related party transactions,than mature medium and large listed companies.Orderly related party transactions under reasonable supervision can reduce the transaction costs and improve profits for GEM IPO companies.However,once out of supervision,due to its difficult-to-examine nature,related party transactions create opportunities for listed companies to use financial fraud to achieve listing conditions.While this fraudulent behavior interferes with the normal operation of the capital market,it also allows users of financial statements,including investors,to suffer losses due to false statements in the financial statements,which has a great negative impact on the investment environment.In order to protect the quality of GEM listed companies,as an important part of the IPO audit of the ChiNext,related party audits will play a key role in ensuring the overall audit quality of IPOs by limiting the pre-existing and post-inspection audits of related party transactions.This paper is based on the analysis of the cause of the IPO audit risk and the causes of the audit risk of the related parties,the countermeasures and suggestions for controlling the IPO audit risk of the venture board are proposed from the perspective of the related party audit.This article focuses on the analysis of related party transactions in the two cases of IPO audit failures on the GEM.After introducing the background of IPO risks and related party audit risks on the GEM board,the starting point of the audit of related party transactions and the combination of the two In the case of transaction fraud,we use fraud triangle theory and financial data analysis to identify the related party audit risk of the case company,and conclude that the CPA failed to identify the related party risk.Based on the loopholes and deficiencies in the audit of related party transactions in the case,it analyzes and explores the causes of failure of the related party's audit risk.Finally,on the basis of exploring the internal flaws of the related party relationship and its transaction definition,understanding the nature of related party transactions and related auditing risks,etc.,from the perspective of the related parties,the issue of the audit risks of the GEM IPO parties in the case was studied.Based on the current situation of the audit of financial fraud of related parties in China,the author puts forward related optimization suggestions for controlling the risks of related parties and concludes the countermeasures for controlling the overall audit quality of the IPO of the GEB by improving the audit quality of related parties.