Study On The Risk Prevention Of IPO Audit

In China,enterprise IPO in the capital market takes the approval system,so whether the enterprise can pass the SFC audit is the key to the success of the IPO.The SFC reviews IPO enterprises mainly still pay attention to their financial situation and operating conditions,these conditions are reflected in the financial reporting data submitted by enterprises,especially related to net profit,accumulated net operating cash flow,operating income,net assets and other indicators,And the work of CPA to carry out IPO audit is to ensure the authenticity of the financial data of the enterprise.But in recent years,because CPA has not been able to play an effective role in the IPO audit business,IPO fraud incidents are frequent,many financially substandard enterprises in order to obtain the huge economic benefits brought about by the listing,the use of a series of seemingly sophisticated fraud means,Therefore,the SFC requires IPO enterprises within three years of the filing period of the financial statements must issue a standard unqualified audit report,CPA is to ensure the authenticity of enterprise financial data,to prevent low-quality enterprises to disrupt the capital market one of the important barriers,but in reality,CPA due to a variety of practical reasons,The failure of IPO audit often occurs,in the long run,the social authority of CPA,professional professionalism,investors ’ confidence in the capital market,will be affected.Therefore,in the period of high level of IPO audit risk,preventing IPO audit risk is a very concerned issue in audit industry at present,which is of great significance for improving audit quality,standardizing audit market,improving CPA’s social status and promoting the healthy development of capital market.Based on the method of theoretical analysis and case study,this paper summarizes the risk points and causes of IPO audit by introducing the case analysis of Ruihua accounting firm to the failure of Liaoning Zhenhua IPO audit,and puts forward some measures to prevent the risk of IPO audit.This paper expounds the present situation of the theoretical research on audit risk and IPO audit risk by scholars at home and abroad,introduces the related concepts and theoretical basis of audit risk and IPO audit risk,and expounds that the current IPO audit risk mainly comes from the accounting firm,the external environment of the audited unit,the theoretical basis has the principal-agent theory,Information asymmetry theory and IPO fraud motivation theory,at the same time,it introduces the prevention mechanism of IPO audit risk,including industry self-discipline mechanism,audit risk assessment mechanism,and the guarantee mechanism of avoiding audit risk.This paperintroduces the case of the failure of the audit of Ruihua IPO in Liaoning,and introduces the financial fraud means used by the accounting firm in detail,including fictitious sales contract,lowering the unit price of raw material purchase,increasing the quantity of raw material storage,and the common means of financial counterfeiting such as false disclosure of main business model.This incident has serious consequences for the accounting firm,the audited unit and the whole capital market,this paper analyzes the risks and risk causes in the audit of Ruihua firm,In view of the risk behavior of Ruihua firm in the audit of Liaoning Zhenhua,there are mainly the shortage of auditors in IPO projects,CPA also has multiple roles at the same time,audit independence is affected,auditors in the unfamiliar industry audit activities,did not take advantage of the work of relevant experts,Through the summary of the realization of these risks finding that the reasons for the failure of Ruihua accounting firm to the audit of Liaoning Zhenhua IPO mainly come from the accounting firm,the existing preventive mechanism and the external environment three aspects.Based on the theoretical basis of IPO audit risk and Ruihua accounting firm’s analysis of the failure cases of IPO audit in Liaoning,this paper puts forward some concrete and feasible suggestions for preventing IPO audit risk,from the accounting firm and The existing preventive mechanism and external environment to consider。In the aspect of accounting firm,strengthen the large-scale construction of the firm,optimize the allocation of resources,improve the strength of domestic accounting firms themselves,organize staff training,improve the quality of staff,reduce staff turnover rate;The existing preventive mechanism,strengthen the construction of professional ethics,strengthen the industry self-discipline mechanism,scientifically formulate work plan,ensure the effective operation of IPO risk assessment mechanism,optimize the organizational structure,improve the existing security mechanism to avoid audit risk;In the aspect of external environment,according to the principal-agent theory,straighten out the relationship between audit entrustment,introduce the third party entrustment mechanism,establish audit Committee,improve the audit independence of CPA,establish and perfect audit market,form evaluation mechanism guided by audit quality,improve the supervision environment of audit market,Clarify the responsibilities of the regulatory department and improve the corresponding laws and regulation.Through the "Ruihua accounting firm on the failure of Liaoning Zhenhua IPO audit" as the material,this paper makes a detailed analysis,induction,conclusion,and based on the previous literature of domestic and foreign scholars to obtain the theoretical basis,from thepractical point of view,put forward to prevent the IPO audit risk of suggestions,hoping to from the perspective of IPO audit,To guide the healthy development of CPA audit industry.