Research On Key Audit Matters Of Listed Companies

The audit report is the primary means of communication between the CPA and the user of the information,providing the user with relevant financial information and risk profile of the audited entity.The traditional three-paragraph model of the audit report only provides a textual description of the audit opinion and the responsibilities of management and the CPA,and does not reflect the specific audit actions performed by the CPA for the audited entity.For the intended users,this type of audit report,which only provides information based on the type of audit opinion,is not sufficient to meet their decision-making needs.In order to address the issues of insufficient depth of communication and information content,as well as to improve the current audit environment,improve the role of audit reports and enhance the usefulness of information for decision-making,in order to provide incremental information to intended users and reduce the audit expectation gap,and to keep pace with the reform of international auditing standards,in December 2016,China’s Ministry of Finance issued the “Chinese Auditing Standard for Certified Public Accountants No.1504-Communicating Critical Audit Matters in the Audit Report” and other 12 auditing standards,formally establishing a new system of auditing reporting standards in China.On 1 January 2017,the auditing standards were formally implemented in A+H listed companies,and the remaining listed companies should start implementing them on 1 January 2018.The focus of the reform of the new auditing standard is to add a paragraph on key audit matters in the audit report,with the aim of disclosing publicly and transparently the specific audit procedures performed by the CPA in the audit,describing the relevant audit response,and facilitating intended users to grasp relevant information about the audited entity and understand the risk profile of the audited entity in a clear and understandable manner,which not only thoroughly implements the risk-based audit principle in the audit,but also places new requirements on the work of the certified public accountants.The increase in the key audit matter paragraph in the audit report has led to a significant increase in its role.The improvement of the audit environment and the quality of audit reports have provided great impetus to the development of the audit and economic markets in China,so in order to make the most of it,the study of key audit matters is of great significance.In this paper,the most representative four major commercial banks in China are selected for study,and by reading the annual reports of the four major banks from 2017 to 2020,the key audit matters and related information disclosed by them are compared and analysed,and then using the disclosure contents and data of some non-four major banks,a double comparison is made with the four major banks,and while identifying the similarities and differences between the four major and non-four major banks,the current disclosure of the four major banks is found.Through the current state of disclosure of key audit matters,we analyse the impact of their disclosure on the auditees,CPAs,audit reports and the market economy.At the same time,by using the double comparison,we analyse the differences in CPAs’ responsibilities and audit risks between the four major and non-four major banks in different states.Finally,based on the problems identified and the conclusions drawn from the above comparative analysis,the article puts forward some policy recommendations in terms of supervision and management and the formulation of standards for the better implementation and functioning of auditing standards in China.In this essay,we use detailed text and data on the content,form,number and word count of key audit matter disclosures of the four major banks over the past four years to identify the similarities and differences among the four major banks and to provide a more comprehensive analysis of the disclosures;we also use relevant data of some non-four major banks to conduct a double comparison to understand the commonalities and differences among them and to further confirm the current problems of key audit matter disclosures and to understand the impact of key audit matters under continuous audit.We also analyse the audit risks and responsibilities of the four major and non-four major banks,as well as the impact of both on key audit matters.The reasons for these problems are related to the identification of key audit matters,the macro environment and accounting firms,which have a positive effect on audit reports,but the impact on both CPAs and the economic market is uncertain.The article concludes with policy recommendations for the reform of China’s auditing standards in the context of the current auditing environment,providing theoretical support for the improvement and development of subsequent auditing standards.