Study On Auditing Risks And Countermeasures Of The New OTC Market Listing Companies

The New OTC(Over the Counter)Market is a nationwide non-listed limited company equity trading platform for small and medium sized enterprises in China’s capital market,plays the basic role of incubators and listed resource reservoirs for small and medium sized enterprises.From 2013 to 2016,the number of violations of the New OTC Market listed companies has been increasing year by year,and the form of performance has been increasingly diversified,it has become apparently "subjectively intentional".2016 was the most stringent year for the supervision of the New OTC Market.The listed company,Shen Xianyuan(831399),been the first company in the New OTC Market to issue an administrative penalty decision because of understated costs,inflated profits,and related party transactions.For accounting firms,in the second half of 2016,four accounting firms including Ruihua,Tianjian,Zhonghua and Beijing Tianyuan,received an inspector’s resolution from the NEEQ(National Equities Exchange and Quotations).The Beijing Shenghua Certified Public Accountants involved in the Shenxianyuan Case was exposed again.Previously,the China Securities Regulatory Commission issued the “China Securities Regulatory Commission Administrative Punishment Decision Statement”,including Beijing Xinghua Certified Public Accountants,and the certified public accountants Wang Quanzhou,Yang Yihui,and Wang Quansheng,who were involved in the IPO auditing of Xintai Electric.By the end of 2016,the number of the New OTC Market listed companies soared to 10,163.The audit risk of its accounting supervision has caused the CSRC to attach great importance to it.On June 5,2017,it solemnly announced the “No.6 Accounting Supervision Risk Warning-Audit of the New OTC Market listed Company”,objective to further improve the quality of disclosure of financial information,strengthen the supervision of the audit business,and urge accounting firms to fulfill their responsibilities in the auditing business of the New OTC Market listed companies.The China Securities Regulatory Commission has warned accounting firms that the ongoing supervision of the auditing business of the New OTC Market is risky,this heavyweight act has once again made the subject of regulatory risks and countermeasures in the audit business of the New OTC Market listed companies thefocus of the theoretical and practical circles.The research theme of this paper is the audit risk and countermeasures for the New OTC Market listed companies,takes the Shenxianyuan case as an example.In this paper,the predecessors’ main achievements and contributions in this topic and related fields are identified.Combining with the analysis of the audit risk and the New OTC Market status,the contents and ideas of this study are drawn up.On the basis of clarifying the basic concepts and theories of audit risk and risk-oriented auditing,choosed the New OTC Market listed company Shen Xianyuan as an empirical target,analyze the facts of financial fraud and management fraud of the listed companies.From the perspective of Beijing Xinghua Certified Public Accountants,it also analyzes the causes of the audit risk of the proposed firm,etc.Finally,relying on the principles and models of modern risk-oriented auditing,it separately presents two major misstatement risks and inspection risks,put forward countermeasures against the audit risk of the listed companies in the New OTC Market separately.Through the above research,I have obtained the following points:With the rapid expansion of the New OTC Market,the number of illegal and irregular cases is on the rise.Strengthening the supervision and service parallel is the basic strategy for the China Securities Regulatory Commission to treat the New OTC Market.The first measure of supervision is to strengthen the audit risk prevention of listed companies.The risk-oriented audit model is the theoretical basis and method system for the audit risk prevention of the New OTC Market listed companies.However,the effective application of this method system is a test for the accounting firm’s capital,professional capabilities,talent reserves,etc.In the New Third Board Market,it will takes a long time to effectively implement the risk-oriented audit model.The best way for a small accounting firm to implement a modern risk-oriented audit model is to form a strategic alliance between the firms.Firms of different specialties will be united through alliances to complement each other,complement each other,and survive the fittest.Modern risk-oriented auditing requires higher levels of knowledge and sensitivity for auditors.In the future,the competition between auditing firms will be more highly qualified and competitive with industry expertise.