Research On Key Audit Matters And Accounting Conservatism Of Agricultural Published Companies

As an important principle to measure the quality of accounting information,accounting conservatism requires not only that the assets and earnings of enterprises cannot be overestimated,but also that the liabilities and losses of enterprises cannot be underestimated,which plays a key role in the objective authenticity of financial reports of enterprises and the healthy operation of the capital market.Once the accounting information is distorted,it will not only mislead investors and cause them to make wrong decisions,but also undermine the order of the market economy and disrupt the allocation of market resources.To avoid the adverse consequences of this situation,the International Auditing and Assurance Standards Board and the Ministry of Finance of China officially issued new auditing standards in 2015 and 2016 respectively,mandating the disclosure of key audit matters in audit reports by certified public accountants and increasing the transparency of the audit process in order to meet the needs of information users.Therefore,whether key audit matters can be used as a powerful communication tool to improve the level of accounting conservatism or not has become a frequent discussion among information seekers.Judging from the penalties imposed by the China Securities Regulatory Commission,the Ministry of Finance and other departments on enterprises and accounting firms in recent years,the internal governance level of enterprises has been continuously improved,and the supervision of external firms has also been strengthened,but the information quality problem of enterprises is still serious.As China’s primary industry,agriculture is a solid force for the development of the national economy.As the leader of agricultural enterprises,listed agricultural enterprises should shoulder the mission of China’s agricultural development.However,due to the particularity of agricultural industry,the difficulty of supervision has gradually increased,fraud incidents of agricultural listed companies in China have occurred one after another,the rights and interests of a large number of investors have been infringed,and investors have doubts about the conservatism of accounting information.Based on this background,how to improve the accounting conservatism level of agricultural listed enterprises and how to improve the accounting conservatism level through internal and external supervision have become the research focus of this paper.Firstly,the paper sorts out the research status of key audit matters and accounting conservatism at home and abroad and the theory based on the literature,which provides a certain theoretical basis for the research on key audit matters and accounting conservatism in China,and then focuses on defining the concepts of internal and external supervision and accounting conservatism according to the content of this paper on the basis of theoretical analysis.Secondly,according to the particularity of China’s agricultural industry,the disclosure of key audit matters and the current situation of internal and external supervision are analyzed,and the disclosure of key audit matters and the actual situation of internal and external supervision are presented.Finally,taking 38 listed agricultural enterprises from 2012 to 2021 as the research sample,the indicators of five different dimensions are combined into a new variable-internal supervision strength through principal component analysis,and whether it comes from the four major international audits is used to measure the external supervision strength,from the two perspectives of internal and external supervision,the impact of key audit matters on accounting soundness and the moderating effect of internal and external supervision on the relationship between key audit matters and accounting conservatism are discussed through model regression.It is found that:(1)by disclosing key audit matters,the supervision effect can be strengthened,thereby improving the level of accounting conservatism;(2)the number of key audit matters disclosed is in the same direction as accounting conservatism,and the more critical audit items are disclosed,the higher the degree of accounting conservatism;(3)internal control can positively affect the relationship between the number of key audit matters disclosed and the conservatism of accounting;(4)external supervision can positively affect the relationship between the number of key audit matters disclosed and the conservatism of accounting;(5)by adding control variables or using the Basu model as another measure of accounting conservatism,the regression is performed again,and all assumptions remain significant.Therefore,based on the empirical research results,this paper proposes a series of effective improvement measures from three aspects:the disclosure mechanism of key audit matters,the internal governance of enterprises,and certified public accountants and accounting firms,for the reference of relevant departments or personnel of agricultural enterprises.This paper from the perspectives of internal and external supervision,the impact of key audit matters on accounting soundness is further discussed,which enriches the research results in the field of internal governance of enterprises and firm governance,and also has practical guiding significance for the revision and promotion of auditing standards with disclosure of key audit matters as the core.