Study On The Disclosed Problems And Countermeasures Of The Reasons For The Change Of ST Weihai’s A Udit Institution

With the continuous development of China’s securities market,the relationship between auditors and listed companies has become closer and closer.Due to the separation of management and ownership of listed companies,market investors have to rely on internal control and audit reports issued by independent third-party auditors to judge the operational development of the companies.Similarly,the sustainable and stable development of the securities market cannot be achieved without the auditing work of auditors who adhere to objectivity and independence.However,in recent years,despite the introduction of a series of national policies and systems as well as the concern of regulatory bodies,there are still not a few listed companies in China that change their annual report auditors every year,and the reasons behind this are worthy of deeper investigation.From the disclosure of the reasons for the change,most of the reasons for the change are relatively general and broad,and there are even cases where the reasons reported to the CICPA by the previous firm are different,and the reasons for the change disclosed by the listed company are different from the reasons reported by the auditor,etc.Many listed companies use simple statements such as business development or auditing needs,longer years of audit services provided by the previous firm or expiry of the appointment period to summarise the reasons for the change.The actual reasons for the change are not discussed.Therefore,through an in-depth study of ST Weihai’s frequent changes in auditors,this paper hopes to combine the reasons for its current disclosure with the real reasons derived from the analysis,identify the disclosure problems and the reasons for their occurrence,and propose governance recommendations accordingly,so as to help investors better understand the capital market,make more correct investment decisions and reduce information asymmetry.This paper selects the representative ST Weihai as the research object,firstly,it introduces the company background and financial situation of ST Weihai.Secondly,we analyse in detail the three changes of auditors and summarise the relevant information,and find that the first and third changes of auditors were upward changes,while the second change of auditors was a downward change.Also,the audit opinion and audit fees changed somewhat before and after the three changes of auditors.Audit fees have been on an upward trend for three years,but the audit opinion has not always been successful in improving.Once again,after an in-depth analysis of the reasons for the change disclosed by the company and CICPA to the public at present,it was found that the problems with the disclosure of the reasons for the change of auditor of ST Weihai were mainly in the three categories of inconsistency in the reasons for the change disclosed by the listed company and CICPA,inconsistency in the reasons reported by the previous and subsequent firms disclosed by CICPA,and overly abbreviated and boilerplate wording in the reasons for the change disclosed.At the same time,the existence of these problems indicates that the reasons for change disclosed by most companies and auditors in the market currently fail to give a complete picture of the true circumstances of the change,resulting in the public being unable to know whether there are problems within the company.After reviewing the company’s annual report,the SFC’s penalty announcement and the SZSE’s enquiry letter and other public information,it is concluded that the real reasons for ST Weihai’s change of auditor may include: change in management,improvement of audit opinion and the auditor’s efforts to avoid audit risks.The above issues will not only damage the reputation of the company and the firm itself,but will also be detrimental to the stable and orderly development of the capital market.Finally,as to the reasons for these disclosure issues,the study found that they were mainly caused by the fact that disclosing the true reasons would have a negative impact on the company and that the current disclosure system for change information is not yet perfect.This leads to the relevant governance recommendations in the final chapter of the paper.For listed companies,there is a need to standardise the internal governance system of the company,to strengthen the relationship between the board of directors,the supervisory board and the general meeting of shareholders and the penalties for non-compliance.For auditors,it is necessary to maintain audit independence at all times and continuously improve the professional ethics of auditors.For the regulatory authorities,it is imperative to improve the system related to the change of auditors,and the cooperation of all relevant departments is needed to strengthen the supervision.