Research On Disclosure Of Key Audit Matters In Pharmaceutical Industry And Countermeasures

As one of the important components of the national economy,the pharmaceutical industry plays a key role in promoting economic development and social progress,while its high-risk,high-investment and high-return characteristics have led to frequent financial fraud and other problems.On 23 December 2016,the Ministry of Finance approved and issued 12 auditing standards.One of the core elements is the newly formulated auditing standard "Chinese CPA Auditing Standard No.1504-Communicating Key Audit Matters in the Audit Report",which requires CPAs to disclose key audit matters in the audit report to provide report users with incremental information to help them understand the audited entity’s business This standard requires CPAs to disclose key audit matters in the audit report to provide report users with incremental information to help them understand the business,financial condition and risk management of the audited entity.Based on the above background,this paper chooses to study the current status of disclosure of key audit matters in the pharmaceutical industry.This paper combines information asymmetry theory,audit expectation gap theory and signaling theory by studying the literature related to audit risk and key audit matters in pharmaceutical industry.With reference to the 2012 version of the industry classification standard of the SEC,all listed companies in the pharmaceutical manufacturing industry(industry code C27)in the CSMAR database were selected and the critical audit matters section of their audit reports from 2017 to 2021 was compiled.It was found that there are problems of low number of disclosures,low degree of standardization of disclosures,insufficient incremental information,incomplete reasons for determination of matters,and low efficiency of information transmission.And the causes of these problems are analyzed in depth.On this basis,Beijing Xinghua CPA Firm audits Harbin Pharmaceutical Company as an example,points out the problems in its disclosure process and analyzes the important matters not disclosed in the audit report of Harbin Pharmaceutical Company.Finally,specific suggestions for improving the disclosure of key audit matters are put forward from three aspects: auditing standards,regulatory authorities and CPAs,taking into account the above causes and analysis.Currently,the inclusion of key audit matters in the audit report by CPAs does not fully achieve the intended goal of audit report reform,which is to provide more valuable information to users of report information through the disclosure of key audit matters.The significance of this paper is to analyse the current situation of disclosure of key audit matters in the pharmaceutical industry,and to propose suggestions and countermeasures to regulate the disclosure process of CPAs,with a view to realising the original objective of audit report reform.