Research On The Audit Risk Of Real Estate Enterprises Under The New Revenue Standards

The Ministry of Finance issued a circular on the accounting(2017)22 on July 5,2017.The new revenue standards maintain the convergence with IFRS15,no longer distinguishes the revenue of different contracts,and unifies the revenue recognition model.The new revenue standards have great impact on the construction,real estate,software and other industries.Among them,some real estate enterprises applied the new income standards in advance in 2017 and 2018,and the income of real estate enterprises is growing rapidly,which triggered external discussion.The revenue standards affect all aspects of the enterprise.Previous researches are often based on the impact of the new revenue standards on the financial accounting of the enterprise,and few literatures have studied the impact of the new revenue standards on the audit risk of the enterprise.Based on this,this paper intends to carry out research in the following three aspects :(1)how does the new revenue standards affect the statements of real estate companies?(2)how can real estate enterprises' earnings management be manipulated under the new revenue standards?(3)the impact of the new revenue standards on audit risk and how to deal with it.This study mainly adopts the method of literature analysis and case analysis.Firstly,the relevant literature and theories are analyzed,and the differences between the old and new income criteria are compared from various aspects.Secondly,the general statement of how the revision of the guidelines will affect the real estate enterprise income accounting.Finally,taking the enterprises that implement the new revenue standards as an example,this paper analyzes the operational space of their earnings management and analyzes the impact of the new revenue standards on the audit risk of real estate enterprises.This paper finds that the new revenue standards has a great impact on the financial statement projects of real estate enterprises,and some financial indicators have a certain beautification effect.Under the new revenue standards,the earnings management space of real estate enterprises increases.Due to the change of standards on enterprise accounting,internal control and other significant impact,real estate enterprises greater audit risk.After applying the new income standards,we should pay attention to the financial pressure,the reconstruction of internal control process and the scope of financial statement consolidation.In addition,there are higher audit risks in the operating income,operating cost,inventory and other subjects of real estate enterprises.The sales business model of major real estate enterprises is roughly the same,so our audit risk research on Seazen Holdings Co.,Ltd.and Country Garden Holdings is universal,and its audit response can be extended to the industry.