Audit Risk Identification And Prevention Of Online Game Companies

With the rapid development and renewal of Internet technology,consumer life and entertainment are becoming more diverse.The world’s sunrise industry of online games has seen a rapid expansion,and its impact on China’s national economy and society has been steadily deepening.Compared to the existing businesses,these new ones have undergone considerable alterations in both operation and profitability.The transaction process is characterized by virtualization,electronization,and openness.At present,China’s academia has little research on the audit risk of online game enterprises,the social practice is insufficient,and the theoretical research is incomplete.Enrich the research on audit risk of China’s sub-industries and improve the audit quality of China’s online game enterprises.The rapid evolution of the online gaming sector,due to the singularity of its businesses,necessitates research into the recognition,prevention and regulation of audit risks.This paper takes M Company,a large enterprise in the Chinese gaming industry,as an audit case study.Utilizing the modern audit risk model and its pertinent theoretical basis,this paper applies literature research,normative research,case study,and other techniques to analyze the entire text.Beginning with the major misstatement and inspection risks,this paper will analyze the existing audit risk in conjunction with M Company’s operation and profit models.Subsequently,this paper will propose countermeasures to reduce or prevent audit risks,taking into account both dimensions of major misstatement and inspection risk.Through research and analysis,this paper clarifies the major misstatement risks of revenue recognition,system security and continuing operation uncertainty faced by M Company in the audit;The nature of the company is different from traditional enterprises,there is no audit software corresponding to online game enterprise auditing,abnormal information disclosure is not in place,and the inspection risks caused by the difficulty of implementing letter verification procedures.In view of the audit risks identified by M Company,this paper proposes countermeasures to prevent or reduce audit risks.On the prevention of major misstatement risk,four suggestions were put forward,namely,focusing on revenue recognition and internal control,strengthening the verification of information system security and focusing on the evaluation of the enterprise’s sustainable operation ability.In order to avert inspection risks,four proposals were proposed: augmenting the execution of essential audit procedure,enhancing the auditors’ professional proficiency,develop audit software and optimize the letter verification procedure.This paper analyzes the audit risk points of Internet game enterprises in depth,puts forward the audit risk response measures for M Company’s audit,and further from the level of the Internet game industry,based on the characteristics of high informatization of Internet game,puts forward the countermeasures and suggestions for the audit risk prevention of Internet game enterprises,with a view to providing auditors with,Effectively identify the audit risks of Internet game enterprises,and provide some help to improve the audit effect and efficiency.