Audit Risk And Prevention Of Yabaite Overseas Operations

Under the global development of “The Belt and Road”,the Chinese enterprises are accelerating the pace of internationalization,more and more enterprises are “going out” and participating in overseas operations.However,the main characteristics of overseas operation of our enterprises are regional and industry selection,limitation of capturing overseas business opportunities,and mainly competing on market and resources,operating in a domestic way.Moreover,the main risks of overseas operation are political risk,security risk,economic risk,management risk and legal risk,which have a certain impact on the foreign-related operation of Chinese enterprises.In such an economic environment,how to reduce the auditing risk of auditing institutions to overseas operating companies and to identify the risk of false fraud and misstatement of accounting statements is very important to our auditing industry,and is an important magic weapon to protect our overseas operations.At the same time,due to restriction of information asymmetry and lack of related supervision,financial fraud in overseas operations becomes easier and misstatements have become more frequent,which undoubtedly increases the difficulty of audit work and audit risk.Therefore,how to reduce the audit risk of Chinese enterprises' overseas operations is very important in both the auditing theory and practical circles in the context of “The Belt and Road”.Domestic and overseas scholars have entered a relatively mature stage in the study of audit risk,but there are relatively few literatures on audit risk of overseas operations.This part of the theory is very important for Chinese enterprises to expand,operate abroad and transnational operations.Therefore,based on previous studies,this paper will focus on the audit risk of overseas operations,and propose relative measures to deal with audit risk based on the analysis of overseas operating risks.At the same time,with the case study of the Yabaite Technology Co.,Ltd.(hereinafter referred to as Yabaite)overseas business audit risk,the case study method is used to review the overseas operation of the company and its operating risks and financial situation during overseas operation,as well as the audit risk of overseas operations.This paper analyses the operating model and operating risks of Yabaite's overseas operations,and analyses the audit risks of Yabaite's overseas operations through the audit risk model,that is,analyzes the audit risks of Yabaite's overseas operations from the two aspects of major misstatement risk and inspection risk.Firstly,the risk of material misstatement can be divided into the level of statement and the level ofidentification of misstatement risk.The major misstatement risk of Yabaite's financial statements is reflected in the late start of the business in which it operates,and the industry's profit margin and overseas business ratio are much higher than the abnormal growth of companies in the same industry under intense industry competition;the company's internal management is centralized and single is not sound Internal management mechanism.The major misstatement risk in the identification level is that the main business of Abbott is single and highly concentrated.The high gross interest rate,abnormal operating income,asymmetric R&D expenditure and the skewness of liquidity ratio and cash flow ratio lead to abnormal situation of accounting subjects with high short-term debt repayment risk.Secondly,the main inspection risk of abate is the lack of professional competence of auditors,including the professionalism of audit work and the professional ethics of audit work.The verification and evidence acquisition of overseas business audits requires auditors to operate in a good grasp of the environment,law and accounting policies.If not,overseas audit verification and forensics will become the main inspection risk.Yabaite described in this case is one of them.This paper studies the audit risk of Yabaite's overseas operations by using the audit risk model,aiming at the audit risk of overseas operations,and the corresponding audit risk prevention measures are finally derived from the external supervision and internal management.First,external supervision measures: constantly strengthen the supervision and punishment of the intermediary structure of firms to build a good audit environment;establish and improve relevant laws and regulations to provide effective theoretical guidance and legal protection for audit practices;regulators build information transmission channels to solve the problem of information asymmetry in all aspects of overseas auditing.Second,internal and external management measures: do a good job of pre-audit preparation,set a reasonable acceptable risk level,set up an effective inspection mechanism,use expert work to improve audit quality,improve professional quality and professionalism of auditors,innovate the organizational model of overseas business audit meet the needs of overseas business audit work in the new era.