On the audit of listed companies should focus on "balance sheet" items

Abstract: With the deepening of structural reforms and standardization and development of securities markets, the current statement of the financial statements have been increasingly unable to meet the demand for information, the disclosure of the information sheet has become inevitable. Article from the management and governance level of listed companies integrity and character of listed companies and the industries in which the boom of the listed company's legal disputes, and matters of uncertainty or issues, corporate governance structure, unusual fluctuations in stock prices briefly six aspects of the formation of a sheet assets the possibility to cause alarm.

Keywords:: listed companies, certified public accountants, auditing, "sheet" items, information disclosure

As China's securities market is still in the initial stage of development, many of the behaviors listed companies is still not standardized, some listed companies in order to achieve some purpose, will conduct a series of illegal operations, some will be reflected in the book, the actual source of the accounts and operations outside, giving the CPA audit of potential problems, while the CPA is often as time and energy reasons, only interested in the performance of the table or out of the account in question, the "sheet" or unlisted issues seriously, if not enough professional care, often resulting in audit failure. In this paper, the CPA should focus on the "balance sheet" items as follows, in order to arouse alarm.

A listed company's management and governance level of integrity and character
First, the lack of integrity, character and does not fulfill its obligations of listed companies, there is a natural suspicion of making false financial information, when dealing with such customers, the CPA's audit may take greater risks, if not maintain a high degree of professional cautious, sometimes to pay a high price. a lot of examples, case studies have shown that a listed company fraud, serious fraud, and violations are the company's management and governance layer (hereinafter referred to as the leadership of great integrity and character relations, and the company leadership above the top of the internal control system, suggesting or directing financial staff, transfer of funds, in order to achieve a certain purpose, through a variety of ways to change the ownership structure in the audit process, are often concerned about the accounting aspects of the CPA specific issues, while ignoring the customer's senior management to understand the past, or lack of understanding of the background, therefore, face great risks of Certified Public Accountants.

Second, as soon as possible a report of listed companies and registered public accountants over-reliance on management's statements may result in audit failure. Intentionally or unintentionally, some listed companies are often temporary commission office, and asked in a very short period of time the audit report if the register accountant in order to attract business to accept such a commission, will often over-reliance on lack of time and unproven management statement or explanation, or even the customer toe, which lost due professional care, it will take a great risk.

Third, the companies conspired with customers or with related pArties (the surface of the virtual non-related pArty sales contract pArtner, the CPA is sometimes difficult to judge its authenticity. How to verify the genuineness of sales revenue, the CPA became seriously troubled by the implementation of audit program of the question. matters described above, a listed company is not good leadership, honesty, fraud, CPA is bound to cause great difficulty and the difficulty of listed company's economic operations more complex, certified public accountants audit the greater the risk, sometimes Although the CPA can collect a lot of strong audit evidence, but still difficult to judge their economic substance of the business, so the CPA to improve the listed company's audit, management and the company should have a deep understanding of decision-making, take leadership ideological trends and ideas of its purpose and intent have a clear understanding, to be invincible.

Second, listed companies and the industries in which the boom
Certified public accountant to the business of the audited entity should fully understand the operation of the accounting is a comprehensive reflection of economic activity of firms, if not familiar with the audited entity's financial operations, limited to relevant accounting information, it is possible to detect problems First, when the unit being audited, when faced with financial difficulties, the possibility of issuing false financial reports on a large and secondly, some of the main listed companies continue to shrink, the main results of a serious downturn, business unsustainable. the reasons for this situation are diverse, some due to industry restructuring, industry-wide downturn, such as the textile industry, some products on the market due to the increasingly saturated, competitive market, such as commercial retail, and some confusion because of the company management, resulting in shrinkage of the main results , losses, etc. However, the accounting statements in order not to be too embarrassing, and some companies have managed to virtual total revenue, or early recognition of sales revenue, profits or other composition pains, to a one-time performance of the company has been changed, such as to sell their assets the sale of land use rights, management rights, transfer of shares, in order to obtain huge profits, some local governments to maintain the image of local listed companies, but also a variety of means of subsidies, the so-called debt restructuring.

Third, the listed company's legal dispute
For various reasons, more and more companies are now involved in legal disputes, and caused varying amounts to the company's liabilities or losses, resulting in the company into extreme financial difficulties and even loss of continued viability of some companies may involve several legal disputes At this time, the CPA should be pArticularly careful, careful consideration should accept the commission. has been entrusted, to pay attention to when it is necessary to remind the company to disclose, when to request the company to extract the necessary preparations, etc. on the continued viability of the loss of almost , and should carefully consider what the audit opinion issued. Links to free download http://www.hi138.com
Fourth, uncertain matters or matters of concern and
Uncertainty issues are: First, the existence of the audited entity to provide a variety of collateral and other customers to provide an irrevocable commitment to the future, and second, there is pending litigation, outstanding claims, bills discounting, or a tax dispute and other losses, Third, the production or survival of the main products in the market the sharp decline in fourth unit being audited financial and operational aspects of the going concern assumption there is no longer in line with signs, etc. Therefore, full attention to the CPA audited units and timely issues of uncertainty additional audit procedures have become necessary. uncertainties include: the audited financial and operating units appear in the going concern assumption is no longer in line with the signs of the audited entity exists to provide a variety of collateral for others and for our customers to provide an irrevocable commitment to the future, and short-term investment-related credit risk is concentrated, stop, or survival of the main products in the market, the sharp decline, there is pending litigation, outstanding claims, bills discounting, or a tax dispute and other losses.

Fifth, attention to corporate governance
Basically, the corporate governance structure, the CPA is not facing the audit scope, but the law. Thus, under the traditional audit methods, certified public accountants often do not pay attention to this problem, but the corporate governance structure is often inadequate CPA brings to all aspects of the problem, it is the basic cause of the problem the company is in the process of practicing CPAs main causes of the risk if the company the following conditions exist, the basic corporate governance that the company's structural problems. First The company has a controlling shareholders by large shareholders and the board of directors, the second is the company's general manager, also serves as chairman of the board, three of the company's general manager, appointed or appointed by the controlling shareholders, four of the company's board of supervisors can not independently exercise the right of supervision; Fifth No other large company's shareholders. Certified Public Accountant in the audit, must fully understand and assess the corporate governance structure is imperfect because the risks, so made an inappropriate audit opinion on the company shareholders, corporate governance structure is actually and the Board of Directors and managers between the principal - agent relationship. principal - agent relationship includes three aspects, namely, employ selection, motivation and supervision. selected recruits how to choose the solution is the principal agent involved is the principal motivation income distribution need to be taken incentives to make the agent to maximize the client's objectives, monitoring of agent behavior emphasizes the principal assessment and constraints in order to prevent acts of deviate from the principal goal of the agent.

Six abnormal stock price volatility
Or mid-year report in the annual report before the dramatic price fluctuations in the risk of listed companies tend to have larger. Numerous cases to prove the securities market, listed companies have been punished, and its shares have gone through tremendous changes. Abnormal stock price changes often with the company financial data together, because the company stock price changes as needed to support financial data when someone wants to manipulate stock prices of listed companies in order to achieve a certain purpose, they gloss over is the usual means of financial data of listed companies.

In summary, a registered accountant in the audit of listed companies should maintain audit professional cynicism, and to overcome the subconscious desire to avoid trouble in the asymmetric information, lack of audit tools to trace the case, except in accordance with auditing standards good internal control testing and the "project review sheet analysis, we must also put more energy, risk assessment of listed companies, and commercial operators to understand the customer's point of view of industry, business and related systems, and more familiar the customer's products, manufacturing, equipment and related safety measures. customer leadership should be skeptical, especially the lack of understanding of their previous experience those first. the client's business philosophy and leadership style and operating unit personnel The voice should be more aware. audit coverage and additional procedures, in the information era, we can through various means for listed companies in industries where the economy and competition, now in a bad habit of auditing is the use of analytical review of the means is not deep enough, a lot of time spent on the review of accounting records and data. "saw wood for the trees." Therefore, "balance sheet" items have a clear understanding, to avoid "a stumble, into the eternal hate."
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