Research On Audit Risk Of Construction Enterprises Under New Revenue Criterion

In order to maintain the convergence development with IFSR15 in 2017,the Ministry of Finance officially issued accounting Standards for Business Enterprises No.14-Revenue based on the specific national conditions of China,which means that CAS14(2006)and CAS15(2006)were abolished at the same time.The new revenue criterion establishes the "five-step" revenue recognition model which breaks the boundary of commodity and service with "contract" as the center.Due to the construction contract income measurement and recognition method is restated,construction enterprises can be said to be one of the industries with the greatest impact in this code reform.Revenue,as an indicator of concern to users of financial statements,is usually treated as a key audit area by certified public accountants.This paper will study the audit risk of construction enterprises under the new revenue standard based on the annual report audit case of GZ Engineering Company conducted by A Accounting firm.This paper reviews and summarizes domestic and foreign literature on audit risk and new revenue criteria,summarizes the theoretical basis of this paper,and expounds the impact of new revenue criteria on the financial accounting and audit risk of construction enterprises,laying a foundation for the case analysis in the following paper.After A public accounting firm to GZ engineering company annual audit case analysis,first elaborated the GZ engineering company after implementing the new income principles of two layers of material misstatement risk,secondly analyses the certified public accountants audit strategies for performing A experience for reference of the same kind of audit services,finally bring forward the countermeasures of audit risk.The research of this paper shows that the new revenue criterion has a far-reaching influence on the financial accounting of construction enterprises.The risk of material misstatement at the level of financial statements will increase under the influence of operating risk,financial risk increase,internal process update and transformation and other factors.The risk of material misstatement at the level of identification mainly focuses on the identification of the authenticity of contract completion,the integrity of accounts receivable and the accuracy of revenue.The experience of A accounting firm’s audit coping strategies includes emphasizing professional suspicion and caution,appointing an audit team with industry experience,and making modifications to further audit procedures.In terms of measures to deal with audit risks after the implementation of the new revenue standards,certified public accountants should grasp the impact of the standards change and control the whole process of audit to improve audit quality.Accounting firms should pay attention to the research and training of the standards and the suggestions of customer segmentation and audit team.This paper reviews and summarizes domestic and foreign literature on audit risk and new revenue criteria,summarizes the theoretical basis of this paper,and expounds the impact of new revenue criteria on the financial accounting and audit risk of construction enterprises,laying a foundation for the case analysis in the following paper.After A public accounting firm to GZ engineering company annual audit case analysis,first elaborated the GZ engineering company after implementing the new income principles of two layers of material misstatement risk,secondly analyses the certified public accountants audit strategies for performing A experience for reference of the same kind of audit services,finally bring forward the countermeasures of audit risk.The research of this paper shows that the new revenue criterion has a far-reaching influence on the financial accounting of construction enterprises.The risk of material misstatement at the level of financial statements will increase under the influence of operating risk,financial risk increase,internal process update and transformation and other factors.The risk of material misstatement at the level of identification mainly focuses on the identification of the authenticity of contract completion,the integrity of accounts receivable and the accuracy of revenue.The experience of A accounting firm’s audit coping strategies includes emphasizing professional suspicion and caution,appointing an audit team with industry experience,and making modifications to further audit procedures.In terms of measures to deal with audit risks after the implementation of the new revenue standards,certified public accountants should grasp the impact of the standards change and control the whole process of audit to improve audit quality.Accounting firms should pay attention to the research and training of the standards and the suggestions of customer segmentation and audit team.