The economic review decision-making strategy in the development of surface management in the prevention and control of current risk insurance enterprises can replace the continuous provision for promotion. Especially in the context of domestic and international double cycle, strengthening social compliance audit can promote the construction of governance system and governance capacity of municipal state-owned enterprises and continuously promote the improvement of enterprise management level. Next, we are going to share how to strength the risk control of social compliance audit.
Strengthening the risk control of social audit
1. Play the role of an audit engagement letter
The audit engagement letter is an important document for the accounting firm and the audited unit to clarify the rights and obligations of both parties. The accounting firm can distinguish the audit responsibility and accounting responsibility by virtue of the audit engagement letter. In case of litigation, it is a powerful weapon to protect the certified public accountant and CPA.
2. Select customers carefully
Careful selection of customers is the first measure that accounting firms should consider to prevent audit risks. The audit cases of Chinese and foreign certified public accountants show that if certified public accountants want to avoid legal proceedings, they must carefully select the auditee. First of all, we should choose the auditee with better management. If the auditee has no integrity to its customers, employees, government departments or other aspects, it will inevitably deceive the certified public accountants and make the certified public accountants fall into the trap they set. Before accepting the entrustment, the accounting firm must take necessary measures to understand the historical situation of the auditee, evaluate its character and clarify the real purpose of the entrustment, especially when carrying out special-purpose audit business. Secondly, special attention should be paid to the audited units in financial and legal difficulties. Thirdly, we should pay more attention to the audited units with imperfect internal control systems. These units have more probability of fraud and error and greater risk.
3. Hire a knowledgeable lawyer as a legal adviser
If conditions permit, the accounting firm shall employ a lawyer familiar with the legal responsibilities of certified public accountants as a consultant. In this way, if you encounter matters that may bear legal responsibility in the audit process, you can consult with lawyers to find ways to avoid them. If the firm issued, it should actively respond to the lawsuit and fight back bravely. At the same time, it should hire experienced lawyers, seriously organize relevant certified public accountants and parties, analyze the case in detail, and strive to turn passivity into the initiative.
4. Communication with former auditors
When accepting the new entrustment, the certified public accountant communicates with the former accounting firm through the audited unit to find out whether to resign, refuse to renew, or be dismissed. Understand the types of previous annual audit reports, main problems, and solutions. If there is a dispute and consensus cannot be reached, in order to reduce audit risk, refuse to sign the audit engagement letter.
5. Make an audit plan
Doing a good job of the audit plan, especially the analysis of audit risk, is the basis of controlling audit risk. After signing the business agreement with the auditee, it is necessary to deeply understand the operation of the auditee and the basic situation of its industry, preliminarily evaluate its internal control system, and determine the degree of importance, so as to analyze the audit risk. Audit risk consists of inherent risk, control risk, and inspection risk. Firstly, the inherent risk and control risk shall be evaluated, based on which the acceptable level of inspection risk shall be evaluated, and the audit focus (highlighting the high-risk areas of audit), audit method and audit scope shall be determined, so as to formulate a practical audit plan.
6. Own professional competence
Before accepting a client, an accounting firm should not only consider the charging time and independence but also consider its own professional competence. Some industries of special nature, such as taking risks to accept entrustment, may have insufficient intention and strength but will lead to adverse consequences.
Precautions in audit and control audit risk
1. Strictly implement audit procedures
Auditors must abide by relevant professional standards, rules, and laws, strictly perform due audit procedures and maintain due to professional prudence. In addition, the senior management of customers should not be taken lightly. In case of any questions, they should ask and reply in writing, so as to avoid disputes that may lead to future losses without understanding.
2. Reform of audit methods
At present, domestic audit methods always make efforts on vouchers, general ledger and subsidiary ledger to check the ending figures of the audited unit, so that the interim figures are ignored and not checked.
3. Collect audit evidence and prepare complete and compliant audit working papers
Audit evidence is the basis for certified public accountants to form audit opinions and issue audit reports. The audit evidence is insufficient and the audit report must be one-sided; If the audit evidence is unreliable, it will make wrong audit judgment and issue an inaccurate audit report. Certified public accountants must effectively use the audit sampling method to obtain evidence comprehensively to ensure the sufficiency and reliability of audit evidence, and can not reduce the evidence collection work blindly in order to reduce the audit cost. As the carrier of audit evidence, the audit working paper shall record the whole audit process in detail.
4. Be familiar with the business nature of customers
When auditing clients, accounting firms should have an in-depth understanding of the client’s business characteristics, enterprise profile, management, internal control, and possible risks, so as to effectively confirm the location of risks, properly arrange the allocation of audit resources, focus on high-risk projects, select effective audit procedures and use more convenient Cost-saving methods to reduce audit risk.
5. Drawing on the work of experts
During the practice of CPA, many audit fields with strong technology, such as the completion progress of real estate projects and my reserves, involve some professional scope, which is not the specialty of CPA. At this time, we must rely on the work of experts to improve the correctness and authority of the audit report.
6. Actively use computer technology
In today’s society, an audit is also facing a network era, which requires firms to meet new challenges, develop new audit procedures, formulate more detailed audit plans, review the economic business recorded in writing, and improve the efficiency and effect of the audit.
7. Standardize audit working papers
The standardized, complete, standard, and unified audit working paper reflects the good attitude of auditors and the reliability of audit conclusions. It is a protective measure to avoid audit risk to be able to prepare and save audit working papers in detail. Audit working papers shall be reviewed. An audit working paper shall be reviewed by the signing certified public accountant, project manager and partner, so as to strengthen the standardization and management of the audit working paper and safeguard the legitimate rights and interests of auditors.
8. Issue a prudent and appropriate audit report
The audit report is a written document issued by auditors to express audit opinions on the audited entity’s accounting statements after implementing the necessary audit procedures in accordance with the agreement or standards. The audit report is the final result of the audit work and the summary of the auditors’ implementation of the agreed agreement. Whether the audit opinions with the audit report as the carrier are in line with the audited matters is an important symbol to judge the audio quality and whether the auditors bear the audit responsibility. Before submitting the audit report, certified public accountants shall carefully review the implementation of key issues, key procedures, and key audit matters specified in the agreement. When preparing the audit report, the facts shall be clear, objective, and fair; The language of the report should be concise and rigorous, avoid using overconfident words such as “true”, “objective” and “accurate”, and use some neutral and flexible vocabulary, such as “fair” and “significant”; If it is considered necessary, an explanation paragraph can be added after the opinion paragraph to explain important matters, so that in case of legal disputes, certified public accountants have more room for maneuver