Research On The Formation And Control Of Audit Risks Of Enterprises On The New Third Board Under Equity Pledge

Driven by the innovation of China’s financial market and the reform of the economic system,the domestic capital market has also developed rapidly.In the capital market financing mode,the equity pledge financing of controlling shareholders has become a common mode.The controlling shareholders pledge their equity as collateral,pledge their own equity to financial institutions for financing,and obtain capital deposits,which greatly improves the cash flow situation and the liquidity of the company’s assets.In recent years,both the total market value of corporate equity pledge and the proportion of pledge have shown a rapid growth trend.However,equity pledge is also a "coin",which will bring two different impacts.On the one hand,it can effectively alleviate the financing constraints of controlling shareholders,but on the other hand,from the perspective of audit risk,a large proportion of equity pledge will lead to excessive earnings management,controlling shareholders’ tunneling of small and medium-sized shareholders and other problems.If the enterprise is still located in the new third board market,the audit risk will be further increased.This is mainly because the entry threshold of the new third board market is low,the various regulatory systems for the new third board market are not mature,the new third board enterprises have not formed an effective internal control system,the internal control defects are large,and the financial management ability is weak.As an important carrier of external supervision,accounting firms are faced with large responsibilities.In addition to the increasing frequency of equity pledge and the rapid development of the new third board market,it is even more necessary for auditors to focus on the audit risk in a specific context and implement corresponding substantive procedures in a targeted manner.Taking the LS of NEEQ enterprises as an example,this paper studies the formation of audit risks of NEEQ enterprises under equity pledge and how certified public accountants can control risks.The paper mainly adopts the methods of document study,case analysis and comparative analysis.Taking LS as an example,this paper studies the formation and control of audit risk of enterprises on the New Third Board under equity pledge.First of all,it combs and summarizes the academic achievements of domestic and foreign scholars on the behavior of equity pledge of controlling shareholders,audit risks and countermeasures,and sorts out the concepts of equity pledge and the private interests of control rights and other theories,providing conceptual definition and theoretical support for the research and analysis of the paper;Secondly,after introducing the scale of China’s equity pledge,the audit risk caused by equity pledge and the relevant audit requirements,we will deeply analyze the impact of audit risk under equity pledge.Then,based on the development status of enterprises on the New Third Board,we will summarize the relevant influencing factors and significant characteristics of audit risk of enterprises on the New Third Board through comparative analysis of the New Third Board,the Growth Enterprise Board and the main board market.In addition,this paper takes LS enterprises as the case background,analyze the earnings management motivation of LS enterprises in the context of equity pledge,and studies the risk of material misstatement under the large proportion of equity pledges of LS companies on the New Third Board and the inspection risks arising from the negligence of the firm from the perspective of material misstatement risk and inspection risk,respectively.Finally,from the perspective of the firm,corresponding countermeasures are proposed for the audit risks under LS equity pledge.This paper selects the new third board enterprises as the case background,enriches the research on the consequences of equity pledge,and also broadens the perspective and ideas of audit risk research.Combining theory and practice,from the practical level and micro perspective to explore and analyze in more detail,to provide new references and innovative ideas for the practice behavior of certified public accountants.