Research On IPO Audit Risks Identification And Prevention Of Companies On The Science And Technology Innovation Board

In order to further deepen the reform of China’s capital market and give full play to the decisive role of the market in resource allocation more efficiently,General Secretary Xi Jinping announced on November 5,2018 the establishment of a new board independent of the main board,namely the Science and Technology Innovation Board,and the pilot registration system in the science and Technology Innovation Board,and then in the GEM and the North Stock Exchange respectively until February 1,2023.The reform of the registration system for stock issuance was officially launched.The registration system is different from the previous approval system in that the regulatory authorities no longer carry out substantive audit on the enterprises,but only conduct spot checks on the integrity and compliance of the materials submitted by the listed enterprises,and assign the task of judging whether the declaration materials are true and the future development prospects of the enterprises to the accounting firms.Therefore,the transformation of the issuance audit system not only emphasizes the concept of taking information disclosure as the core,but also strengthens the responsibility of accounting firms as the gatekeeper of the capital market as an intermediary.After the launch of the registration system of the Science and Technology Innovation Board,the number of enterprises planning to apply for listing on the science and Technology Innovation Board has increased significantly,and the related audit demand is also increasing year by year.The regulatory authorities have stricter requirements for accounting firms.Many enterprises on the science and technology Innovation Board have been established for a short time,their maturity is not high,and their development is unbalanced,resulting in high corresponding risks,which leads to an increase in the probability of audit failure faced by certified public accountants.Therefore,in order to improve the practice quality of certified public accountants and promote the sustainable and healthy development of the capital market,it is of great practical significance to explore how to identify and prevent IPO audit risks of enterprises on the science and Technology Innovation Board.This paper adopts the method of case analysis and literature analysis to sort out the domestic and foreign literature on audit risk definition and influencing factors,audit risk identification and response,IPO audit and audit risk characteristics,audit focus and risk related research,with modern risk-oriented audit theory,information asymmetry theory and resource allocation theory as theoretical support basis.This paper analyzes the IPO audit risk identification and prevention of enterprises on the science and Technology Innovation Board.By studying the characteristics of IPO companies and audit risks on the Science and Technology Innovation Board,this paper finds that the causes of IPO audit risks on the science and Technology Innovation Board include the reduction of issuance threshold by registration system,the difficulty of auditing the enterprises to be IPO and the lack of professional competence of auditors.After that,XY Company is selected as the case study object,and according to the audit risk model,the risks that CPAs may face when auditing XY Company’s IPO are identified from three levels:the risk of material misstatement at the level of financial statements,the risk of material misstatement at the level of identification and the risk of inspection.It mainly includes the risk of material misstatement at the financial statement level,such as management fraud risk,going concern risk and internal control effectiveness risk,and the risk of material misstatement at the identification level,such as revenue,R&D investment,inventory impairment and bad debt of accounts receivable.There are also inspection risks such as audit project undertaking risk,insufficient professional competence of auditors,lack of independence of auditors,and inadequate implementation of audit procedures.It also puts forward some suggestions on preventing audit risks,such as carefully selecting IPO audit projects,deepening the understanding of IPO enterprises and their industries on the Science and Technology Innovation Board,building a high-quality audit team,innovating IPO audit methods on the science and Technology Innovation Board,strengthening the quality management of IPO audit projects of accounting firms,and strengthening the audit of key risk projects of IPO enterprises on the science and Technology Innovation Board.Finally,the paper summarizes the research conclusions,and puts forward the shortcomings of the paper and the prospect of the future research direction.It is hoped that this will be helpful to the research on the identification and prevention of IPO audit risk of companies on the China’s science and technology Innovation Board.