Disclosure Problems Of Key Audit Matters In Audit Reports

Audit reports is the carrier for CPAs to express their audit opinions,and they are important ways for investors to obtain the operating conditions of the enterprise.The original audit report model was a “qualified or unqualified” model,which named dualistic model.After the outbreak of the global financial crisis in 2008,investors hope that audit reports can disclose more information not only audit opinions.In order to meet the increasing demand of information content and shorten audit expectation distance,many countries or regions began to revise audit reports,and the disclosure of key audit matters in audit reports is one of the most important measures.In the newly auditing standards,all the countries or regions have regulated the disclosure of key audit matters,and they have defined them.Contrast the definition,we know that they are roughly the same,they all call the most important matters for key audit matters.It is good for promoting the information content and communication value of audit reports,improving the transparency of audit work,and strengthening CPA's audit responsibility to disclose the key audit matters and announce important information such as the risk of material misstatement in audit reports.Chinese financial authority issued an auditing standard named Chinese CPA Auditing Standard No.1504-Communicate Key Audit Matters in Audit Reports(hereafter this text will be abbreviated as No.1504 Standard)in 2016,and the No.1504 standard requests disclosing key audit matters in audit reports.The standard is applicable for “A+H” shares in 2016 annual audit reports and other listed companies in 2017 annual audit reports.This paper takes the key audit matters in audit reports issued by PricewaterhouseCoopers Zhong Tian(hereafter this text will be abbreviated as PWC Zhong Tian)in 2017 audit annual as the main sample,the next we analyze the disclosure of key audit matters statistically,discuss some shortcomings in the disclosure process,and then discuss the causes from three dimensions,which are auditors,the accounting firm and supervision perspectives,and make personal recommendations at last.The paper consists of six parts.The first part is the introduction,which mainly introduces the research background and significance of key audit matters,existing literature,research ideas and methods.The second part is the theories which is relevant to the disclosure of key audit matters in audit reports,including the concept and judgment criteria of key audit matters,disclosure elements and related research theories.The third part introduces the basic situation of the disclosure of key audit matters in the audit reports from PWC Zhong Tian,including the basic situation of PWC Zhong Tian and the audited bodies,the status and some shortcomings of the disclosure of key audit matters,such as incomplete disclosure factors,fewer disclosures,and less timeliness of disclosures.The fourth part analyzes the reasons for the shortcomings from three dimensions,which are the auditors,the accounting firm and the regulatory authorities.The problems in the disclosure of key audit matters are partly due to the auditors less control,the accounting firm's insufficient quality control and the lack of guidance and supervision at the regulatory level.The fifth part gives some suggestions to improve the disclosure of key audit matters from the three main body based on the third and the fourth parts,specifically including that the auditors should improve self-attainment,the accounting firm should improve quality control system and supervision institutions should strengthen supervision and narrow audit expectation gap.The sixth part is the conclusion,gives a summarization and frospect on the disclosure status of key audit matters,and we point out the shortcomings of this paper.Due to the industry status of PWC Zhong Tian,the problems in the disclosure of key audit matters of PWC Zhong Tian may also appear in other accounting firms.We hope that we can provide reference for other accounting firms,and on the other hand,we can promote the research on key audit matters through this article,and then improve the disclosure of key audit matters so that we can maximize the role of key audit matters,and promote the development of auditing reports.