Research On Related Party Transactions Auditing

With the gradual improvement of the market economy,the relevant technical means are gradually updated and progress,many companies want to have a place in the capitalist market.In order to achieve this goal,enterprises have adopted various ways to occupy the market,such as purchase or merger of small companies,cooperating with other companies,etc.The cooperation management,joint holding,joint ventures between them make the market very complex,in this case,the related party transactions also come into being.The pricing methods of related party transactions are different from ordinary transactions,its price is determined by the two parties to the transaction,and related party transactions can help enterprises to adjust the profit and then given beautiful financial statements.So the related party transactions provide a very favorable means for the interests of the enterprise stakeholders to seek personal interests.In recent years,the related party transaction fraud has become more and more in China's market,from the largest shareholder of the enterprise to management,all of them intend to divide a cup of a thick soup in the interests of the unfair related party transaction.They use a variety of ways to attract investors,such as inflated profits,whitewashing statements.They damage to the interests of shareholders of some small enterprises.The use of related party transactions continues to rise.It is difficult to identify the transaction,and there is no specific statute and regulations on the market,it will undoubtedly become a difficult problem in the field of audit.Related party transaction is very secretive and complex.In recent years,related party transactions become extremely broad,market regulators continue to adjust and formulate relevant laws and regulations to standardize the related party transactions,but have not been very good effect.The complicated relationship of related parties make CPA audit of the enterprises related to the transaction more difficult.Slightest mistake may lead to the audit failure.Various factors make related party transactions audit being in a high risk area.Once the audit fails,it will cause irreparable damage to the certified public accountants and even the firms.Therefore,in the audit of related party transactions of enterprises,CPA should treat it with caution,strengthen communication with the enterprise,use targeted auditing process to prevent unfair related party transactions and reduce the occurrence of audit failure.In view of the above situation,this article mainly carries on the thorough research on the Hainan Honz Pharmaceutical's related party transaction financial fraud audit case.The article introduces the meaning of the related party transactions and the audit content,analyzes the characteristics of the audit of related party transactions,so as to find out the problems existing in the audit of related party transactions.And it detailed analyzes the causes of CPA failed to expose related party transactions.This paper also expounds the theoretical basis of the related party transactions audit.It focuses on the problem of the audit process.It also builds targeted audit procedures for related party transaction,and proposes to strengthen the related party transactions audit recommendations by combing with the relevant causes of non disclosure and non fair related party transactions.This article uses the combination of case and theory methods to analyze the related party transactions audit through the case of Honz Pharmaceutical financial fraud.There are six parts in this article.The first part is mainly about the background of related party transaction and about domestic and foreign research of the related party and related party transactions.And finally the basic ideas and framework of this paper are explained.The second part introduces theory of related party transactions and the related party transaction audit,definition of the related party and transactions.It also introduces the content of related party transactions audit,including its characteristic,content and theoretical basis.The third part analyzes the problems in the audit of the related party transactions of Honz Pharmaceutical.Firstly,it introduces the company's basic operating and organization and the situation of related party transactions fraud of Honz.It analyzes the related party transactions between Honz Pharmaceutical and Tonghui and Zhongrui.Then it analyzes the problems of CPAs in auditing Honz related party transactions fraud,it includes insufficient identification of related party fraud,inappropriate communication with the audited entity and imperfect auditing program.In the fourth part,the article analyzes reasons for CPA failing to reveal the related party transactions of Honz Pharmaceutical from different perspectives.It includes regular audit process,CPAs' inadequate understanding of related party transactions and the internal management of the accounting firms.The fifth part puts forward the revelation of the accounting firm strengthening the audit of related party transactions.Firstly,auditors should strengthen identification of the deliberately concealed related party relationships and non-fair related party transactions of the audited entity.Secondly,CPAs should improve their own ability and character,especially in the audit of related party transactions.They should also update their knowledge reserves and improve their professional capabilities to detect and identify phony related party trade,then reduce the related party transaction audit risk.The last part is a summary describes of the whole thesis.It introduces the imperfect places in this paper.Finally,this article want to makea little contribution to development of related party transactions audit through the case of Honz Pharmaceutical in the future.