Research On Audit Risks And Control Countermeasures Brought By The Selection Of Key Audit Items

The society is developing healthily and steadily,and the problem of information asymmetry still exists,mainly among the economic entities in the market.Certified public accountants need to issue an audit report after completing the audit work,and the audit report is one of the important ways for the public to obtain the effective information of the audited entity.By looking at the information in the audit report,information users can master the relevant financial data of the audited entity and judge the development of the company accordingly.Therefore,certified public accountants should ensure the quality of audit reports,which is also very important for the development of the economic market.At the beginning of 2015,the Assurance Council and the International Audit issued the No.701 International Auditing Standard,which revised the disclosure requirements of audit reports and,most importantly,increased the disclosure of key audit items.With the continuous improvement and development of China’s auditing standards,at the end of 2016,the Ministry of Finance issued the Auditing Standards for Certified Public Accountants of China No.1504(hereinafter referred to as "Standards No.1504").The standard requires listed companies with A+H shares to be implemented in 2017,and all listed companies will disclose key audit items according to the revised new standard in2018.Therefore,certified public accountants and firms should fully understand the impact of the revision of auditing standards.How to effectively select key auditing items and ensure auditing quality and minimize auditing risks is a new problem that firms and auditors urgently need to solve.This paper is based on the theory of key audit matters and audit risks,and the research object is Ruihua Office.Firstly,the audit clients of 70 Ruihua firms are taken as the research object,and the selection of key audit items and the existing problems are analyzed.Secondly,select Kang Dexin,a specific audit client of Ruihua Firm,to study the selection process of key audit items of Kang Dexin.Then,it analyzes the audit risks existing in the process of selecting key audit items of Kangdexin by Ruihua Firm,mainly from two aspects: the risk of material misstatement and the risk of inspection.The risk of material misstatement is mainly analyzed from four aspects:revenue recognition,related party transactions,accounts receivable and monetary funds.The inspection risks are mainly analyzed from the aspects of audit procedures and their inadequate implementation,certified public accountants and quality control of Ruihua Firm.Finally,some suggestions are put forward in view of the risks existing in the above audit work.Through research,the following conclusions are drawn: First,Ruihua Firm’s selection of key audit items is relatively small,and the content is too templated and not targeted.In addition,the selection of key audit items is biased towards the key concerns of the industry.Second,the major misstatement risks reflected by key audit items mainly come from revenue recognition,related party transactions,accounts receivable and monetary funds.Third,the audit procedure is not fully implemented,which will lead to the risk of capital occupation of related parties not being identified.And there are some problems,such as the lack of effective detailed test of monetary funds and insufficient audit procedures of internal control system.In the process of auditing,CPA’s failure to maintain professional caution and professional skepticism,lack of professional quality,imperfection and incomplete implementation of the quality monitoring system of the firm will all lead to audit risks at the inspection level.Fourthly,effective audit procedures should be set according to the actual situation of the audited entity,risk assessment procedures should be carefully implemented and targeted substantive analysis procedures should be designed.To improve the professional judgment ability of certified public accountants,certified public accountants should maintain their independence and strong awareness of risk prevention and control in the audit process,and use their professional knowledge to complete the audit work independently.The firm should establish and improve the quality control system,ensure the audit quality,and then ensure the smooth progress of key audit matters.