A Case Study On The Failure Of Biological Assets Audit ——Taking "Zhangzi Island" As An Example

In recent years,many agricultural listed companies have still been exposed to financial fraud scandals.This has had a great negative impact on investors.While these fake news have set off a raging tide in the capital market,the external audit problems hidden behind them have also attracted the attention of people from all walks of life.Whether audit institutions issue factual audit opinions in accordance with the relevant provisions of the standards has become the focus of attention.The main products of agricultural enterprises are biological assets,and their "living" attributes are very different from those of industrial enterprises.Therefore,the audit risk faced by audit institutions in auditing biological assets is also more special.If reasonable and effective audit procedures are not implemented,it is easy to lead to audit failure.This paper takes Zhangzidao Group Co.,Ltd.（hereinafter referred to as Zhangzidao company）,which mainly deals in aquatic products such as shrimp and scallop,as a case confirmed by the CSRC in June 2020.From the perspective of biological assets,this paper studies the audit risks related to biological assets during the audit of Dahua accounting firm,so as to analyze the causes of audit failure,Based on this,this paper puts forward some measures to prevent audit failure.Through combing the financial fraud of Zhangzidao company,this paper makes a basic introduction to the two objects involved in the case.By consulting the annual audit report issued by Dahua certified public accountants,this paper expounds the audit procedures adopted by Dahua certified public accountants in the audit of biological assets and the audit evidence collected.And to judge whether the audit procedures implemented by Dahua accounting firm are perfect and reasonable.Through the analysis,it is found that the biological assets operated by Zhangzidao company,in addition to the special breeding environment,which makes it difficult to monitor the inventory and high cost,have the biological transformation,which makes the value evaluation difficult.These matters make it easier for Zhangzidao company to fabricate the financial information of biological assets,especially the impairment of assets,and increase the audit risk of accounting firms.There are defects in the internal control of Zhangzidao company,the chaotic governance environment,one person holding multiple duties and the unreasonable ownership structure are the incentives for the risk of material misstatement;Risk control is a mere formality,which makes its risk early warning measures flawed.There are also some problems in the audit work of accounting firms,such as lack of independence,inadequate implementation of procedures,and non optimization of inventory technology.Whether the accounting firm has taken precautions against the failure of the audit business within the scope of the audit;Pay attention to the internal control audit of the audited unit,and focus on checking whether the internal control measures are in place and whether there are potential risks;Strengthen audit professionalism and optimize the allocation of audit resources;Innovative audit technology;Comply with the rotation system;Use external expert resources,etc.