Case Study On Audit Failure Of Related Party's Fund Occupation

At present,with the rapid development of China's economy,there are more and more related relationships between companies.The problem of related party's fund occupation has become one of the important reasons for financial statement fraud.From 2000 to now,the number of related party transactions of Listed Companies in China has increased hundreds of times,and the form of large shareholders' occupation of funds is more diversified,complicated,and the means are more hidden.More and more listed companies choose to use the companies with undisclosed related relationship to occupy the funds of hidden related parties.The hidden related party transactions make the work of auditors more difficult,and the possibility of audit failure and inappropriate audit opinion is increasing.Ruihua certified public accountants received the punishment decision of the CSRC in 2018 and 2019 due to the failure of audit on the hidden related transactions of Huaze cobalt nickel.In this regard,certified public accountants and accounting firms in China should be more vigilant to the problem of related party's fund occupation.From the perspective of methods,they can help the audit industry to solve the weak problem of related party's fund occupation audit,and make the relevant knowledge and experience of auditors accumulate and improve.This paper is a case study,the main research object is the frequently occurring problem of related party's fund occupation.Based on the perspective of accounting firms,this paper analyzes the cases,focusing on the problems existing in the audit of Ruihua accounting firm.Based on the case of audit failure of Huaze cobalt nickel by Ruihua certified public accountants,this paper briefly analyzes the causes of audit failure and summarizes as follows: first,lack of audit procedures to identify hidden related parties;second,auditors fail to comply with professional ethics;third,poor implementation of analytical procedures;fourth,credulity in internal control of auditees;fifth,imperfect audit quality control system ?On the basis of the existing and standardized auditing procedure standards,this paper tries to find out the regulations and contents related to the audit of related party's fund occupation,and focuses on the study of what other aspects need more attention,so as to preliminarily integrate and put forward the feasible audit procedure of related party's fund occupation.For the reasons of the above audit failure,this paper briefly puts forward some countermeasures and suggestions for the certified public accountantsand accounting firms: attach importance to the identification of related transactions,improve the comprehensive quality of auditors,implement targeted audit procedures,obtain reliable audit evidence and improve the quality control system of audit institutions.This paper puts forward feasible suggestions for each kind of suggestions Method of operation.In the context of the increasingly rampant fraud of related parties and the limited work of auditors,the research on the audit of the occupation of related parties' funds is of practical significance.I believe that after the current audit chaos has been paid attention to by the industry,a clear audit procedure for the occupation of related party funds will become the work program of auditors to a certain extent,and contribute to the healthy development of the securities market and the protection of the interests of small and medium shareholders.