Research On Huatan Company's Material Misstatement Risks Of The Financial Statements

With the gradual development and complexity of economic business,as the external competition becomes increasingly fierce,some listed companies seek to get rid of difficulties or pursue their own interests.As a series of audit failure events,traditional risk-oriented audit has obviously can't meet the demand of audit environment changes and the audit objective,the modern risk-oriented audit arises at the historic moment.In 2003,the international audit and forensics standards committee issued new auditing standards,which defined audit risk as audit risk = major misreporting risk.The new guidelines introduced the concept of this new material misstatement risk,through in-depth understanding of the auditees and environment,to identify and evaluate financial statements level and recognition level of material misstatement risk,then evaluate the material misstatement risk take corresponding countermeasures.The modern risk-oriented audit requirements for certified public accountants to implement the concept of risk-oriented audit in the audit process,focus on the material misstatement risk identification,assessment and response,planning and implementation of the audit work.The identification and evaluation of the risk of material misstatement is the core of modern risk-oriented audit.Only accurate identification and evaluation of material misstatement risk,and to provide after the audit work in the right direction,to optimize the allocation of limited auditing resources,to achieve the purpose of reduce audit risk.Reasonable and optimal allocation of audit resources also meet the cost-benefit principle.Since China's ministry of finance issued new auditing standards in 2006,modern risk-oriented auditing has been widely used in China,thus improving the level and quality of audit work.However,in practice,there are still some problems in how to accurately identify and evaluate the risk of material misreporting.How to quantify the risk of material misstatement in practice still requires further study and discussion.Auditing standards more from the Angle of the theory analysis and guidance of audit work,rules lack of maneuverability,to practice the guiding role of limited,firms and certified public accountants in practice need to based on the criteria for further elaboration and grope.Therefore,through case analysis,this paper combines the theory and practice of risk analysis of material misstatement to make it more operable in actual audit work.In this paper,Huatan company is selected as a case study.The company is in chemical fiber industry,which mainly produces chemical fiber.The company has been operating badly for many years,and has made up losses through selling assets twice in the past five years.The company has a certain typicality and representativeness as a major misreporting risk case.Revealed through case analysis,the purpose of this paper is to the company for many years lead to bad results of potential risk of material misstatement and stood in the Angle of certified public accountants audit countermeasures is put forward,at the same time this paper according to the evaluation of material misstatement risk identification--to train of thought,on how to identify the material misstatement risk in detail,for a specific case,an qualitative evaluation of material misstatement risk,and put forward Suggestions,built a bridge between the material misstatement risk analysis and practice,strengthen the operability,make have exemplary role.This paper consists of six main parts.The first part is the introduction,which mainly sets forth the background and significance of this research and elaborates research methods and framework.The second part systematically expounds the literature and relevant theories about the risk of material misreporting.The third part introduces the case company,expounds the method of identifying the risk of material misstatement,and applies it to the case company for analysis;The fourth part introduces the method of assessing the risk identification of material misstatement,and carries out the risk assessment of the material misstatement.The fifth part of the audit countermeasures,mainly from the overall strategy and concrete measures to carry out the countermeasures;The sixth part is the conclusion.