Study On The Influence Of Business Link Risk On The Risk Of Material Misstatement

The management link risk is an inevitable kind of risk in each enterprise operation process,the management link risk of different industry or different scale enterprise is different.Because the external political and economic environment is complex and changeable,and the internal operation management of the enterprise may also appear omissions,the impact of the operating risk on the enterprise itself and the specific items of its financial statements is increasing day by day,which also increases the possibility of material misstatement of the enterprise.However,for the enterprise,not all the operating risks in the business link will eventually evolve into the risk of material misstatement,so it is important to accurately and effectively identify the risk factors that affect the risk of material misstatement.At the same time,with the strict standardization of social and government supervision,the responsibility of accounting firms and their affiliated certified public accountants for the accuracy of annual report audit becomes indispensable,and the risk of material misstatement of financial statements is related to the accuracy of enterprise annual report audit.Therefore,in order to reduce the risk of material misstatement and improve the audit accuracy of CPA,it is helpful to study the influence path of internal and external mechanism that the risk of enterprise management link evolves into the risk of material misstatement.Based on the above research background,this paper selects the listed companies that failed to audit to carry on the case analysis,uses the case analysis method and the risk factor analysis method and so on,first carries on the identification to that may exist in each link the main risk factor,then expatiates these management link risk causes and conditions,then analyzes the company internal and external influence mechanism,deeply analyzes the company management link risk to the material misstatement risk reason and the influence factor,thus provides the new thought for the enterprise to avoid the material misstatement risk and enhances the CPA audit accuracy.The study found that:(1)Inappropriate enterprise policies and regulations will influence the risk of business link to material misstatement risk by controlling total cost,false increase income,capitalization of R&D investment and fictitious sales business performance;in order to establish positive image,enterprises will influence the formation of material misstatement risk by false profit,subjective and objective economic environment.(2)When the enterprise has serious financial problems,the weak incentive mechanism will strengthen the management's fraud motivation,thus promote the formation of the risk of material misstatement;when the financial situation is not good,the enterprise will take into account the image and credibility of the enterprise,financial data fraud,resulting in the risk of material misstatement;the company's internal control defects have a key impact on the risk of evolution into material misstatement.The innovation and contribution of this paper lies in:on the one hand,only take all kinds of risks existing in this link of enterprise management as the research object,explore the concrete influence path and mechanism of enterprise management risk evolving into the risk of material misstatement,and there is a certain degree of innovation in the research angle and research content.On the other hand,this paper,starting from the modern risk-oriented audit and combining with the actual cases,provides a certain reference for auditors to carry out audit practice operations,and also provides a new perspective for enterprises in the same industry to reduce and prevent material misstatement.