Research On Audit Risk And Prevention Of Listed Companies In Environmental Protection Industry

The 19th National Congress of the Communist Party of China has put forward new requirements and standards for the construction of ecological civilization,and has taken expanding the environmental protection industry as an important entry point for green development.With the introduction of environmental protection policies and increasing demand,the environmental protection industry has developed rapidly and has a broad market prospect.Many environmental protection companies adhere to the concept of an everlasting foundation and have embarked on the path of IPO.In 2021,43 companies involved in environmental protection business were listed,raising a total of 19.939 billion yuan,forming the largest environmental protection enterprise listing trend in history.However,due to the early barbaric development,lax supervision,and non-standard market order,the current phenomenon of low price and vicious competition in the environmental protection industry is widespread.In order to strengthen their competitiveness and actively expand their market share,some environmental protection companies have even begun to engage in violations of laws and regulations,which not only affect their sustainable development,but also harm the interests of investors,increasing the audit risk of certified public accountants.Based on this,this paper starts with the development characteristics and violations of the environmental protection industry,summarizes and analyzes the audit risks currently commonly faced by the environmental protection industry,and takes Shenwu energy saving,a representative enterprise in the environmental protection industry,as an example to analyze the main problems and audit risks currently existing,with a view to focusing on small issues and proposing targeted measures to prevent audit risks in the environmental protection industry.This paper uses a combination of literature research and case analysis methods,based on information asymmetry theory and risk oriented audit theory,and with the help of modern audit risk models,to comprehensively analyze the audit risks of the environmental protection industry and Shenwu energy saving.The research finds that:(1)The major factors affecting the material misstatement at the financial statement level of the environmental protection industry are mainly due to industry distortions Business risks,weak corporate financing capacity,and weak merger and acquisition integration caused by supply homogeneity and project operation difficulties;The influencing factors of identified level risk are mainly reflected in the recognition of accounts receivable,revenue,and implicit related party transactions;The main factors affecting inspection risk are improper audit procedures by CPAs,failure to maintain due professional suspicion,and insufficient professional competence of CPAs in understanding market competition and operating modes in the environmental protection industry.(2)The risk of material misstatement at the financial statement level in the case of Shenwu energy saving mainly comes from operational risks caused by changes in macro policies and fierce competition,corporate governance issues caused by a dominant shareholder and strong family atmosphere,significant defects in internal control,short financing terms,and a single structure;The risk of material misstatement at the identified level mainly comes from three aspects: accounts receivable,revenue recognition,and prepayments;The main reasons for inspection risks are that certified public accountants do not maintain due professional suspicion of income,there are defects in audit procedures in important aspects such as prepayments and accounts payable,difficulties in obtaining evidence for overseas business,and the lack of good quality control by accounting firms.(3)Finally,CPAs can take various measures to prevent risks: In terms of significant misstatement risk alerts,CPAs should pay attention to the internal and external development and changes of the enterprise,consider the characteristics of the environmental protection industry,and timely identify risks in terms of income and accounts receivable;In terms of inspection risk prevention,it is necessary to standardize the implementation and review of audit procedures,improve the professional quality of CPAs,and strengthen the quality management of accounting firms.This paper analyzes the current audit risks faced by the environmental protection industry,and puts forward targeted suggestions.It is hoped that while enriching relevant theories,it can provide some reference for CPAs to conduct audit work in environmental protection enterprises in the future.