Analysis And Improvement On Disclosure Of Key Audit Matters

According to the needs of the development of the situation,on December 23,2016,Ministry of Finance of the People’s Republic of China issued 12 Auditing standards for Certified Public Accountants,hereinafter referred to as the New Auditing Standards.Among them,No.1504 audit standard is the most important in many standards.The promulgation of the new audit standards means that the traditional audit report has been unable to meet the application requirements of audit practice.Compared with the situation before and after the implementation of the new audit standards,it can be found that the operation of the new standards helps to improve the information content of audit reports and promote the openness and transparency of audit procedures.The reform of the new domestic audit standards is deeply affected by the reform of international audit standards,which means that the domestic audit industry standards continue to make breakthroughs and progress,close to the international developed countries,symbolizing the domestic audit industry toward international standards.Up to now,the new audit standards have been fully implemented for more than four years.Taking this as an opportunity,this thesis explores the specific implementation of the new auditing standards in practical work from the perspective of accounting firms.Taking Ernst & Young Firm as the research subject,this thesis analyzes and studies the key audit matters disclosed in its audit reports from 2016 to 2020.This thesis discusses the status quo of ZTE’s key audit mattersThrough research and analysis,this thesis found that Ernst & Young CPA firm disclosed ZTE’s key audit matters in accordance with the basic provisions of the standards,but there are still defects and irregularities.In the form of disclosure,Ernst & Young uses the form of table listing;In terms of the disclosure content,this thesis finds that the key audit matters disclosed by Ernst & Young from 2016 to 2020 have the following deficiencies: non-compliance of disclosure elements,insufficient number of disclosure,templates of disclosure,little differentiation of disclosure contents in different years and so on.The types of key audit items that Ernst & Young chose to disclose mainly focus on assets impairment and revenue recognition,from which we can see that the key audit items disclosed by Ernst & Young lack pertinence to specific audit clients.This thesis analyzes the root causes of the audit firm’s exposure of these deficiencies in the disclosure of key audit items from several aspects: the audit practitioners’ lack of professional basic literacy,unable to make accurate professional judgment;The quality control system of accounting firms itself is not perfect,including the training of practitioners is not in place,the quality review is not in place,the lack of specific disclosure standards,the fierce competition between accounting firms,etc.The reasons for this include the imperfect supervision mechanism and insufficient control.Finally,aiming at the deficiencies and causes of the defects in Ernst & Young’s disclosure of key audit matters,this thesis lists a series of suggestions on how to improve the disclosure of key audit matters.Due to Ernst & Young in industry in a leading position,the problems of disclosure of key audit matters are representative,therefore the author hope that through this article research,on the one hand,it can help Ernst & Young improve the disclosure of key audit matters in practical work,can also provide a reference for other certified public accountants.On the other hand,it can promote the joint research and discussion of scholars on the disclosure of key audit matters,further improve the disclosure content and form of key audit matters,and promote the progress and development of audit reports.