Study On Fraud Audit Of Related Party Transactions

With the rapid development of China's market economy,the number and size of enterprises are growing,and the competition among enterprises is becoming more and more fierce.In order to gain the competitive edge and reduce the risk of enterprise operation in the fierce market,enterprises strengthen the mutual cooperation through investment,strategic alliance and other ways,which generated a large number of related party transactions.Related party transactions can be divided into legitimate related party transactions and improper related party transactions.Legitimate related party transactions can reduce the transaction costs between enterprises.This can help achieve economies of scale in enterprises,thereby reducing product prices and increasing the competitiveness of enterprises in the market.However,improper related party transactions could harm the interests of relevant investors,affect the investment enthusiasm of the securities market,and impede the development of the securities market.At the same time,due to the concealment and complexity of related party transactions,it would be favored by the management and become a way of financial fraud when the company is in a recession or based on a certain purpose and demand.As a social intermediary,accounting firm is the monitor of the securities market and takes the responsibility of safeguarding the interests of all clients.However,the frequent failure cases of related party transactions reduce the trust of investors on accounting firms and affect the healthy development of the audit industry.Therefore,it is of great practical significance to study the fraud audit of related party transactions.Before studying the specific cases of fraud audit in related party transactions,this paper firstly analyzed the frequently used means in fraud cases of related party transactions in China from an industry perspective,and summarized the problems in the audit of related party transactions in recent 10 years.Then,this paper focused on the affiliated party fraud audit case of G company,including the analysis of the basic situation of G company's affiliated party,the fraud means used in related party transactions,ways to identify and assess the affiliated party transactions audit risk under the risk oriented audit ideas,and pointed out ABC accounting firm's problems in their audit to G company and analyzed the reason of these problems.Finally,from the perspective of accounting firms and auditors,suggestions are put forward to help reducethe risk of audit failure caused by fraud in related party transactions.