Information Content To Key Audit Matters Of Revenue Recognition Of Real Estate Listed Companies

In order to maintain full convergence with international standards,in December2016,the Chinese Ministry of Finance promulgated “Chinese CPA Auditing Standard No.1504-Communicating Key Audit Matters in the Audit Report”,which requires the addition of key audit matters in the audit report to provide more information to meet the growing information needs of investors.On the other hand,revenue can highly reflect the business operation,and the disclosure of key audit matters on revenue recognition by CPAs is an important reference value for investors in terms of economic decision-making.Based on this,this paper focuses on the real estate industry,which has a significant impact on China’s economic development and conduct a study on the information content to key audit matters of revenue recognition.Firstly,relying on a review of existing literature and theoretical foundations,this paper constructs evaluation criteria for information content based on the definition of key audit matters and the purpose of the issuance of Auditing Standard No.1504.Then,the audit reports of A-share listed real estate companies in 2017 and 2018 were used as a sample to analyze the disclosure of key audit matters of revenue recognition and to summarize their information content in general.Finally,the audit reports of Wolong Real Estate for 2017 and 2018 were used as examples to provide an in-depth analysis of the information content of key audit matters of revenue recognition in terms of relevance,materiality and understandability in the context of the company.By analyzing the current situation of the information content of key audit matters of revenue recognition of A-share listed real estate companies,combined with the specific situation of Wolong Real Estate,this paper draws the following conclusions:First,from the disclosure of the real estate industry as a whole,the information disclosed on key audit matters of revenue recognition can reflect the special characteristics of the real estate industry with certain information content.Second,with the growth of the implementation time of the new auditing standards,the information content of revenue recognition key audit matters has been improved.Third,the disclosure of revenue recognition key audit matters still has more homogeneous information and too brief descriptions,which may affect the information content of revenue recognition key audit matters and reduce its information value to a certain extent.Therefore,in order to improve the information content of key audit matters of revenue recognition,regulators should refine the implementation standards of the new auditing standards and strengthen the evaluation and management after the implementation of the standards;CPA firms should strengthen the quality control of audit business and carry out targeted guidance and training;at the same time,CPAs should also enhance their professional judgment and written expression skills to effectively improve the information content of key audit matters of revenue recognition.