Business Group Unified Audit And Restate

After the reform and opening up,China's capital market developed rapidly.As the carrier of information of the listed company,financial report is the most direct way for stakeholders to understand the company's financial status,operating results and cash flow.However,financial statement that have been supplemented and corrected in the form of temporary announcements after the initial disclosure are now frequently happened in listed companies.Financial restatement weakens the authenticity,reliability and credibility of the listed company's financial report.It not only reduces the information quality of listed companies but also dampens the enthusiasm of investors.It will do harm to the healthy development of China's capital market.Therefore,financial restatement has attracted widespread attention from regulators and scholars.As an indispensable economic organization in the capital market,business groups occupy an important position in the national economy.With the rapid development of enterprise groups,a new type of auditing method-group unified audit came into being.Group's unified audit has its unique information advantage over individual audits.In the case of the Group unified audit,the auditor can simultaneously contact other listed companies in the group,so that they will have comprehensive understanding of the audited entity and better implement the risk assessment process,then rationally implement the audit procedures.It can also improve audit efficiency and reduce the occurrence of financial restatements.Therefore,this paper intends to study the relationship between the group unified audit and financial restatement,to test whether group unified audit can reduce the possibility of a financial restatement occuring,and the impact of related transactions,internal control and auditor size on the relationship between group unified audit and financial restatement.This paper takes the data of A-share listed company group in 2008-2017 as a sample,and treats two or more companies under the same controller using the same accounting firm as group unified audit.By reading the temporary announcement of the listed company,the financial restatement data was manually compiled,and the sample was divided into accounting error samples and financial restatement announcement samples according to different financial restatement measurement methods.This paper use theoretical analysis and empirical test to verify the relationship between the group unified audit and financial restatement.Besides,the sample is grouped and compared based on the scale of related party transactions,internal control and auditor scale.The research results show that the group's unified audit can suppress the occurrence of accounting errors and financial restatement announcements.When a listed company has a connected transaction,lower internal control level and select large accounting firm,group unified audit can more significantly suppress the possibility of accounting errors and financial restatement announcements.This paper puts forward relevant policy recommendations for the listed companies and policy makers.It give advices for the selection of auditing methods for listed companies and provides empirical evidence for policy makers to formulate relevant policies and regulations.