Research On Biological Assets Audit Risk And Countermeasures

In recent years,China’s listed agricultural companies have repeatedly made use of biological assets to conduct financial fraud,such as the Cao Yuan Xing Fa that made use of avian flu to fake huge compensation,the Yunnan Green-land that made use of continuous dry weather to fake,and ZONECO that scallops ran away twice.The frequent occurrence of fraud in agricultural listed companies is mainly due to the large number of biological assets in agricultural companies.Biological assets,different from ordinary inventories,are difficult to count,difficult to measure,and susceptible to natural factors.These characteristics increase the risk and difficulty of audit.In addition,the confusion of the internal control of listed agricultural companies and the lack of professional competence of certified public accountants also bring greater challenges to the audit of biological assets.Therefore,it is significant and urgent to analyze the audit risk of biological assets and to deal with it effectively.Therefore,in this paper,on the basis of combing the literature research,use ZONECO in 2014 and 2017 scallops rejection events as a case,from biological assets,internal control,auditing,three perspectives to analyze ZONECO biological assets audit risk,and from public accounting firms and government aspects to give suggestions to how to deal with biological assets audit risks.This article selects ZONECO’s scallops event as the study case is from the following several reasons: First,ZONECO is mainly by manipulating the value of its biological assets-scallops for fraud,scallops are difficult to measuring,difficult to inventory,easily affected by natural factors,which is a major cause of ZONECO to manipulate scallops value;Secondly,ZONECO has used biological assets to conduct fraud for many times,and the "Scallop Escape" incident has been widely discussed and influenced,and the data available are relatively comprehensive.The specific analysis is as follows:Firstly,the case background of ZONECO scallop extinction event is introduced,including the development background of China’s aquaculture industry,brief information of ZONECO,the review and summary of two scallop extinction events.Secondly,on the basis of combing the two scallop failure events of ZONECO,the audit risk of biological assets is analyzed from the perspectives of biological assets,internal control and auditors.Finally,according to the analysis of the audit risk of ZONECO biological assets,this paper puts forward suggestions and countermeasures on how to deal with the audit risk of biological assets from three aspects: accounting firm,government regulatory department and listed company.The following conclusions are drawn: First,the audit risks of ZONECO biological assets are reflected in the following aspects: high operational risk of the biological assets,high measurement difficulty of the biological assets,problems in disclosure,poor internal control environment,failure of internal control and management in each production stage,insufficient professional competence of auditors,improper audit methods,etc.But generally speaking,most of these risks are directly or indirectly caused by the particularity of biological assets themselves.Second,to reasonably deal with the audit risks of biological assets,in addition to the efforts of accounting firms,such as strengthening the professional competence of certified public accountants,cultivating relevant industry professionals,attaching importance to the supervision and inventory procedures,and innovating audit technologies,relevant government departments are also required to improve the audit standards of biological assets.And strengthen the supervision and punishment as well as the listed company itself to improve the internal control system and strict implementation.