Research On The Audit Risk Of Huanrui Century Backdoor Listing

Since 1990,China’s capital market has been booming,and the number of listed enterprises has been increasing.With the increasing demand for funds,stock financing has become a popular financing method for many enterprises due to the large amount of financing available and the improvement of visibility.Therefore,it also makes the channel of listed financing crowded.Strict listing requirements and urgent financing needs make backdoor listing become the choice of many enterprises.Compared with the initial public offering,the listing time of backdoor listing is shorter and the threshold is lower.Backdoor companies inject high-quality assets into the listed company,which not only preserves the listing quota but also promotes the allocation of resources.In the second half of 2019,the CSRC announced the official release of backdoor restrictions on the GEM,while resuming backdoor matching financing.Although the current registration system has begun to implement,but with the loosening of the reorganization listing,reorganization listing still has a place.Under the environment of increasingly strict requirements for backdoor listing,corporate financial fraud occurs from time to time,which not only disturbs the order of the capital market,deviates from the goal of resource allocation,but also increases the audit risk of the restructuring and listing business of the firm.How to better identify and prevent risks in the audit of merger and reorganization has become a key issue for certified public accountants.This paper studies the audit risk of backdoor listing and its preventive measures by literature research and case study.First of all,this paper sorts out the relevant research results on financial fraud and audit risk of backdoor listing,and introduces the general situation of backdoor listing and audit risk of Chinese enterprises,which lays the foundation for the audit risk analysis and preventive measures of backdoor listing in the following.Secondly,taking Huanrui Century backdoor listing as a case study,based on the theoretical basis of modern risk-oriented audit,this paper analyzes the risks of Beijing Xinghua Certified Public Accountants in the backdoor listing audit from two aspects: the risk of serious error report and the risk of inspection.Finally,according to the analysis of the audit risks of backdoor listing,the corresponding improvement measures are put forward from the major blunder risk and inspection risk respectively.In this paper,the study found that Beijing xinghua certified public accountants to huan rui century backdoor listing of audit risk is mainly reflected in:(1)huan rui backdoor listing of the century before and after the unreasonable equity structure,invalidation of internal control and corporate governance effect is poor,lacking the ability to continue as a going concern and performance commitment period earnings management behavior frequently make certified public accountants face the larger statements layer material misstatement risk.(2)Possible financial fraud risks in revenue recognition,inventory impairment,receivables and prepayment make certified public accountants face greater risk of material misstatement at the identification level.(3)CPA does not fully understand the audited company and its environment before backdoor listing audit,fails to maintain professional prudence in the process of backdoor audit,does not strictly implement audit procedures,lacks of audit quality control and lacks of industry expertise,making it difficult to effectively control the inspection risks.To solve above problems,this paper puts forward the following countermeasures:(1)statements layer material misstatement risk prevention,in front of the backdoor audit certified public accountants,to fully understand the auditees and environment audit on shell side ownership structure,corporate governance and internal control,strengthen the backdoor continuous management ability to audit and performance audit.(2)In terms of preventing the risk of material misstatement at the identification level,certified public accountants should focus on the key matters of the audited entity and prevent the possible risk of financial fraud.(3)check the risk guard aspect,certified public accountants need to maintain a professional care and suspicion attitude,strict implementation of audit procedures,certified public accountants need to assess audit risks,cautious to undertake business,also want to regularly carry out training activities,improve the auditor’s professional ability,at the same time also need to strengthen the control of audit quality,Thus improve the audit risk prevention ability of accounting firms.