CICPA: Annual Audit should pay close attention to related party relation and transactions

CICPA lately announced the notification of be prepared for the listed companies annual audit. This notification required accounting firms with securities practice qualification and CPAs sparing no effort in annual audit of listed companies. It also emphasize that CPAs should pay close attention to: 1) related party relation and transactions, income recognition and measurement, assets impairment and other areas with material risk; 2) GEM company audit, going concern basis audit and other difficult matters, 3) assessing if there are risk of material misstatement especially fraud caused risk of material misstatement; 4) considering the possibility of management override control and the necessity of additional targeted audit procedures to cope with during annual report audit process.

What is noticeable, this notification has mentioned some professional code of conduct implementation issues separately in a prominent position aiming at financial fraud and delisting after shares issued happened one after another in domestic capital market.

This notification also clearly required accounting firms fully focus on material risk field and difficult special matters. It also stated that accounting firms should strengthen quality control in early phase and resolve various issues encountered in annual report audit as early as possible while intensifying prior control, on the spot control and afterwards control.

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The information published above is in summary form and intended for general guidance only. This information is not intended as legal, accounting or other professional advice and should not be relied upon as such. Neither Reanda CPAs nor any related entity shall have any liability to any person or entity that relies on the information contained in this publication.