Research On Audit Risk Of Related Party Transactions Of H Company

As China’s economic development enters a new normal and the scale of companies gradually expands,the frequency of related party transactions in listed companies gradually increases.Covert and complex related transactions have become an important means for some listed companies to whitewash their financial statements,disrupting the order of the capital market while also increasing audit risks.The unclear definition of related relationship,coupled with the escalation of corporate fraudulent means,has brought great difficulties for auditors to perform audit procedures.Therefore,auditors should pay more attention to the audit of related party transactions and seek more effective risk prevention measures.At present,academics mostly analyze the causes of internal risks of listed companies as an entry point,but there are fewer studies that analyze the causes from the perspective of accounting firms.By sorting out the current status of related party transactions and audits from 2010 to 2020,this paper summarizes the common problems in the current audits of related party transactions and thus draws the dilemma of auditing related party transactions that we are currently facing.Based on the perspective of external audit,a case study method is adopted,and a listed company H,which operates a wide range of business and has more subsidiaries under the control of central enterprises,is selected as a case study object.In 2016,Baker Tilly International issued a non-unqualified audit report for Company H,concluding that there were undisclosed related party transactions,and in 2017 and 2018,Accounting Firm A issued an unqualified audit report for the company for two consecutive years.In October 2019,Company H broke the news that its subsidiary had fictitious related party transactions and provided irregular guarantees to related parties,and Accounting Firm A has an inescapable responsibility in the whole incident.Therefore,this paper takes the audit of Company H by Accounting Firm A as an example,and analyzes the causes of the audit risk of related party transactions of Accounting Firm A through specific case studies,mainly including the poor professional competence of auditors,the inadequate quality control system of accounting firms,and the imperfect system of related party transactions of external regulators,and proposes targeted risk prevention from three perspectives of auditors,accounting firms and external regulators.This paper discusses the audit of related party transactions in the current "lightning" incident of central enterprises,which is widely concerned by the capital market,and focuses on the causes and preventive measures of related party transaction audit risks.It is hoped that this paper will be useful for research in related fields and provide useful references for audit practice,so as to better maintain the market environment,improve the professionalism and credibility of auditing,and promote the healthy development of the audit industry.