When undertaking business, they may pay more attention to their own interests, undertake business regardless of risks, fail to fully understand the audit customers, fail to pay reasonable attention to the industry risks and operational risks of the audit customers, and thus fail to properly implement the risk assessment procedures. The CPA's due risk assessment of Asia-Pacific industry is insufficient, which reflects the lack of risk assessment of the real estate industry. Tongchuang Jiaye's real estate development and sales business is the most important source of industrial income in the Asia-Pacific region, accounting for more than 90% of the combined operating income. The auditors did not carry out the risk assessment procedure for the main business and real estate industry of Tongchuang Jiaye, and the sales revenue of Tongchuang Jiaye continued to rise, which was contrary to the overall situation of the industry. In view of the abnormal phenomenon, the certified public accountant easily recognized the oral explanation of the audit client and did not carry out other procedures. Moreover, the Asia-Pacific industry is in poor operating condition, and there are fraudulent motives for deliberately manipulating the estimated liabilities and adjusting profits. Therefore, it is necessary to pay special attention to the financial fraud risks of the management during the audit. The auditors failed to correctly evaluate the internal control of Hua Ze Cobalt and Nickel, and there were serious defects in its governance structure, such as the cross-appointment of the management layer and the senior management of affiliated companies, the unreasonable composition of the members of the board of supervisors, and so on. The auditors did not identify the potential risks of financial fraud. In addition, the risk assessment failed to consider the financial fraud risk of its reverse purchase and listing and related profit commitments to the management. Since 2015, Kangdexin's books have a large amount of monetary funds but borrowed heavily, which is not in line with the principle of cost-effectiveness, indicating that it may have the risk of financial fraud.
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