Research On The Information Content Of Key Audit Matters In The Real Estate Industry

The development of real estate industry has promoted the continuous growth of GDP,but also can drive the development of construction industry and property management industry and other related industries,which plays an important role in the process of our economic development.However,since the proposal of "no speculation in housing",in order to implement stricter supervision and control on the real estate industry,the state has successively issued three important policies,namely "three red lines",centralized management of bank mortgage loans and "two centralized land",which have brought about more changes in the financing strategies of real estate enterprises,and also affected the future development strategies of real estate enterprises.Real estate investors also need more information to help them make investment decisions.The Ministry of Finance formulated Auditing Standards No.1504 in 2016,which requires communication of key audit matters in audit reports.The purpose of issuing new auditing standards is to narrow information gaps and align with international standards.Therefore,based on the perspective of investors,based on the new situation of the real estate industry and the background of the release of new audit standards,this paper will explore what information the disclosure of key audit matters of real estate enterprises provides for investors and whether these information can assist investors to make decisions,and then lead to the main body of this paper:information content of key audit matters of real estate enterprises.In this paper,two representative real estate enterprises are selected for horizontal and vertical comparative study.Based on the perspective of investors,starting from the internal needs and external conditions of investors,the information content effectiveness analysis is carried out on the relevance,adequacy and intelligibility of the disclosure information.The intelligibility is analyzed by text analysis method,and the index of intelligibility is innovated.Finally,the market reaction is used to verify whether the information content is really transmitted to investors and thus affects their decisions.After the overall analysis of the real estate industry combined with the analysis of specific cases,the following conclusions can be reached:On the one hand,the key audit matters of real estate enterprises can bring information content to investors,which is embodied in:Key audit items disclosed by auditors have industry and enterprise characteristics,and the operational risks and financial information quality risks related to the auditees can be transmitted to investors through the disclosure of key audit items,which can provide more references for their investment decisions.At the same time,disclosure of key audit matters improves investors’understanding of audit reports,broadens the transmission path of risk signals,and thus affects investors’ decision-making.In addition,the disclosure of the Big Four has more information content than the Big Eight.On the other hand,through case comparison,it is found that there are still some problems in the information content of key audit matters in the real estate industry,including insufficient disclosure,inconsistent significance measurement standards,partial description template,and less information increment in subsequent years.The main cause of these problems is that the regulations of the standards and guidelines are not detailed enough,so that CPA’s understanding of the standards has a certain deviation;Certified public accountants tend to disclose matters with high industry concentration in order to reduce their own responsibilities and avoid career risks.Lack of professional competence of certified public accountants;The industry lacks audit report quality supervision.Finally,this paper puts forward measures to improve these aspects from the level of certified public accountant,firm and regulatory agency,and puts forward suggestions on how investors should interpret and use key audit matters to make decisions.