Research On Recognition And Auditing Strategy Of Fraud In Related Transactions Of Listed Companies

With the support of national financial policies,the number and scale of listed companies continue to grow,but competition with each other has become increasingly fierce.In order to form competitive advantages and reduce business risks,many companies cooperate with others to form related parties.Real and fair related party transactions have indeed played a vital role in cutting down corporate interaction expenses,enhance corporate competitive edges and further vitalize the vigor of capital market.However,some listed companies transfer benefits,risks and even conceal illegal behavior through related party transactions.In the past,companies such as Yinhe and Beisheng transferred assets to related parties,and now Huaze and Baoqianli use hidden related parties to commit fraud.The fraud methods of related party transactions have become increasingly complex and concealed.Auditors participate in social and economic supervision as an independent third party.Among the 35 administrative penalty decisions issued by the China Securities Regulatory Commission against accounting firms from 2010 to 2019,16 involved listed companies involved fraud in related party transactions,accounting for 45.71%.How to effectively identify fraud in related-party transactions and what auditing strategies should be adopted for related-party transaction audits have become the focus of current auditors.This paper categorizes and summarizes in-depth study hitherto by some scholars concerning related party transaction fraud as well as auditing and aims to build up the premise for the following argument.On the basis of analyzing this type of fraud over the past ten years,we classify the related party transactions fraud into two genres,namely,the “encroachment” and “profit manipulation”.Through a summary analysis of 16 failures of related party transaction fraud audits,it was found that the failure of related party transaction fraud audits was due to failure to accurately identify fraud risks.Therefore,this paper collects relevant data of 41 companies with fraudulent related party transactions and utilize Logistic regression to construct a listed company related party transaction fraud identification model,and conducts an profound analysis of the motives and means of Huaze and the auditing problems of Ruihua Certified Public Accountants.Eventually,based on the risk-oriented audit theory,this paper proposes the path to perform fraud audit of related party transactions by implementing the fraud audit with the idea of "focus on fraud-identify fraud-find fraud".The contributions of this paper are as follows: 1.The types of fraud in related party transactions are divided,“encroachment” and “profit manipulation”;2.Logistic regression fraud identification model is constructed to assist auditors Preliminarily identify the risk of fraud in related party transactions;3.Propose fraud audit strategies for related party transactions,enrich the audit reference of related party transactions,improve audit efficiency and quality,and avoid audit failures.