Study On The Impact Of Financial Report Inquiry Letter On Audit Risk

In January 1998,the Shenzhen Stock Exchange issued the "Shenzhen Stock Exchange Listing Rules",requiring the stock exchange to issue inquiries,listed companies should make timely replies.In 2015,the number of disclosed letters gradually increased to 485,and the types increased,including the license reorganization inquiry letter,periodic report inquiry letter,etc.By December 31,2022,the Shenzhen Stock Exchange had issued 958 inquiries.This includes 297 annual reports,521 concerns,81 restructuring inquiries and 59 announcements,for a total of 958.The annual report inquiry usually requires a reply from the auditee,and sometimes also from the auditor.Does the process of the auditor receiving the annual report inquiry and replying to the letter reduce the relevant audit risks? Can the auditor audit work with the help of the annual report inquiry to find useful clues? These are the questions discussed in this article.This article will be divided into five sections.First of all,this paper will analyze the existing literature on inquiry letter and audit risk identification and the relationship between them,and clarify the definitions of inquiry letter and audit risk of exchange annual reports on the basis of the existing literature research,which will serve as a theoretical basis for the case analysis in the following paper.Secondly,by referring to the official website of Shenzhen Stock Exchange,the official website of Shanghai Stock Exchange,CNRDS database and other materials,the current situation of inquiry letters was analyzed,including the number of annual report inquiry letters,the focus of attention,the way of sending letters,the way of auditor reply,etc.Then,the case analysis method was used to analyze the audit of Bading Technology by Shu Lun Pan CPA Firm and its receipt of inquiry letters in 2016,2017,2018 and 2020.The audit risks that could be identified according to the inquiry letters were discussed,and corresponding countermeasures were proposed based on the case.The research methods of this paper include literature review method,case analysis method and quantitative analysis method.Through the combination of three methods to summarize the current listed companies annual report inquiry letter characteristics,development trend and the impact on the audit risk.This paper holds that the exchange inquiry contains important financial information and non-financial information,and the auditor can analyze the risk of material misstatement with the help of the annual report inquiry,identify and check the risk,and implement the corresponding procedures to reduce the risk.The description of the status quo of the annual report inquiry letter of the stock exchange and the case analysis of the audit of Bading Technology by Shu Lun Pan CPA Firm are helpful for investors,listed companies,accounting firms and other subjects in the capital market to have a clearer understanding of the status quo of the annual report inquiry letter of the stock exchange.And from the perspective of auditors,listed companies,regulatory opinions,reduce audit risk.