A Study On The Implementation Of Standard On KAM In The Game Industry

Audit report is an important product of modern audit work and an important bridge for companies to communicate with investors.However,the early audit report content is limited,often can not meet the requirements of audit report users.After the 2008 financial crisis,in order to improve the reading value of audit reports,relevant institutions around the world actively explore the mode reform of audit report.China also launched the new Audit Standards No.1504 in 2016,aiming to improve the quality of audit work and deliver more value information to investors.However,because the performance of the KAM standard and guideline in China is only four years and still in the start stage of implementation,it is inevitable to deviate from the original intention of the standard reform.Therefore,this paper takes revenue recognition matters as an example and focuses on the game industry.Based on the overall analysis of KAM in the game industry from2017 to 2020,this paper conducts an in-depth analysis of the reasons for revenue recognition matters were identified as KAM in the game industry and audit response procedures from horizontal and vertical aspects.Through the overall analysis of the KAMs in the game industry,this paper finds that the game industry audit institutions are mainly concentrated in eight domestic accounting firms;The form of disclosure mainly adopts text,but the form of disclosure tends to increase.The number of disclosure gradually decreased and stabilized at about 2;The disclosure matters mainly focuses on revenue recognition and goodwill impairment,which is not much different from the capital market as a whole.After in-depth analysis of revenue recognition matters,this paper finds that the reasons for KAM of revenue recognition include seven aspects from high coverage to low,including complicated recognition and measurement of game revenue,high proportion of game revenue,revenue belonging to key performance indicators,and involving management judgment and so on.The audit response procedures for KAM of revenue recognition,from high coverage to low coverage,include understanding and evaluation of internal control,implementing IT audit,implementing interview and confirmation procedures,and checking relevant supporting documents and so on,eleven aspects in total.This article also finds that the performance of the No.1504 audit standard has the characteristics of industry,accounting firm and consistency.In addition,after in-depth analysis of revenue recognition matters,this paper found that there are still some imperfections in the performance process of No.1504 audit standard in the game industry,such as improper selection of matters,inadequate disclosure of matters,non-standard disclosure of matters,errors in disclosure of matters,and insufficient personalized information of matters.This paper also finds the reasons of the imperfections,and puts forward that regulators should refine the application guideline of KAM audit standard,advance the quality supervision of report disclosure,and clarify the responsibility boundary between auditor and accountant.The accounting firms should advance the quality management system and pay attention to the training and construction of auditors.Auditors should deepen the understanding of the No.1504 audit standard;Enterprises should strengthen the understanding of the No.1504 audit standard and so on.