Case Study Of Ruihua Certified Public Accountants’ Audit Failure To Kangdexin

In recent years,with the release of the punishment decision of the CSRC on accounting firms that violate the rules,the case of audit failure have been exposed continuously,and successive audit failures have continuously reduced the public’s trust on third-party audit institutions,which is worthy of the whole CPA industry to conduct a profound reflection on professional prudence.This article takes Ruihua certified public accountants to Kangdexin’s new audit failure events for example,using the case analysis and literature review method,there are mainly four part divided:The first part is basic introduction,mainly illuminates the research background and significance,audit failure analysis of the causes and countermeasures from domestic and international research,and research methods and structure;The second part is about case description,mainly introduces relative situations about Kangdexin and Ruihua,and reorganize the related events of the case,and reveals the process of Kangdexin’s financial fraud,meanwhile,it is found that Ruihua has been punished by the CSRC for many times before this event;The third part is about case analysis,on the basis of the concept,characteristics and relevant theoretical basis introduction about audit failure,from the perspective of accounting firms and auditors,concretes detailed even deep analysis of the reasons for the audit failure of Ruihua,the analysis found that Ruihua’s audit process did not maintain proper professional suspicion,audit procedures did not reach the designed position,audit staff were lack of professional competence,through further study found Ruihua exists internal problems,together with external industry competition and deterrent supervision,all directly or indirectly caused the failure of Ruihua,and then expounds the impact of the audit failure on Ruihua and Kangdexin;The fourth part is the enlightenment and suggestions,through case study this paper draws the conclusion and enlightenment to the audit future events,the corresponding analysis of the audit failure reasons,there are five countermeasures and suggestions: respectively from CPA should stick to independence,certified public accountants should improve business management and internal governance,also should improve external competition mechanism,and strengthen external government supervision,which will lead to improve audit quality,reduce audit risk,reduce the possibility of audit failure,hoping that every parts work together in many different ways,push the audit industry to sustainable and well development.