Research On Audit Failure Of Government Grant In Listed Companies' Annual Report Audit

In recent years,with the increase in the amount and scope of government grants received by listed companies,which are easily overlooked in the audit of annual reports,are bound to have a significant impact on the performance and the authenticity of information disclosure of listed companies in China.At the same time,due to the inherent flaws in the market economy,the government is required to intervene in the economy by its "visible hand".As one of the effective forms of economic intervention,because of government subsidies' strong predictability and continuity,providing a large amount of earning management space for listed companies,which causes more and more prominent problems in the processing of accounting treatment of government grants.Some listed companies have even used government grants to whitewash their financial performance for many years in order to maintain their listing status and participate in capital market operations.Through the search of the CSMAR database,as many as 50 listed companies were punished by the CSRC(China Securities Regulatory Commission)for accounting violations of government grants during 2006-2016.The annual accounting supervision report of listed companies repeatedly reflected that the government grants has become a key issue in violation of the listed company for continuous years.On the basis of the Accounting Supervision Risk Warning No.1:Government Grants issued by the CSRC in May 2015,with the increasing proportion of government grants in some listed companies and listed companies profit,this accounting subject has become the key risk areas of CPA auditing and accounting supervision department should pay more attention to.This paper starts from the related literatures of government grants and audit failure,analyzes the basic economic theory of government subsidies,the definition and the related theories of audit failure.Then through data statistics,making an overall description of government grants of the listed companies,analyzing the total characteristics and industry distribution of the government grants,so as to understand the whole situation of China's listed companies' government grants,classifying and categorizing the the 50 listed companies that were punished by regulatory authorities such as the CSRC for accounting violations of government grants during 2006-2016.Afterwards,summarizing four typical problems,such as inappropriate confirmation,nonstandard information disclosure,incorrect classification and deferred information disclosure.And listing four listed companies for four different categories,they are Henan Lianhua Gourmet Powder Co.,Ltd.(600186),Gansu Huangtai Wine-Marketing Industry Co.,Ltd.(002461),Hubei Sanxia New Building Materials Co.,Ltd.(600293)and Guangzhou Echom Science&Technology Co.,Ltd.(002420),analyzing the CPA's failure to find cases in which the listed company failed to perform accounting irregularities through government grants,resulting in failed audits.Finally,through a summary analysis of the above cases,some suggestions for avoiding the failure of governments grants audit are put forward,and some optimization procedures for the government grants audit are drawn.Through the study of this paper,government grants audit can be divided into two stages,which are risk assessment,risk identification and risk response.In two three stages,the CPA can determine the government grants' risk points through the understanding of the internal and external environment of the listed company.And then CPA can implement some targeted audit procedures based on risk points,thereby improving the quality of audits and reducing the occurrence of audit failures.