A Case Study On The Failure Of FG Company Aduit By ZZ Accounting Firm

With the continuous adjustment of China’s economic policies according to the national conditions,China’s economic strength is rising,the capital market is also improving,and the role of audit in economic supervision is becoming more and more important.The accounting firm mainly undertakes the external audit work to provide a reasonable guarantee for the quality of the enterprise’s financial statements.The users of the financial statements can judge the company’s status according to the audit report and make some decisions.Therefore,the quality of the audit is very important for the users of the financial statements.However,in recent years,users of financial statements’ trust in accounting firms has been declining,mainly because of the endless occurrence of audit failure cases.In 2021 alone,the CSRC had 10 administrative punishment decisions on accounting firms.Without the trust of the public,the accounting firm industry is difficult to develop for a long time.Therefore,it is of great significance to study the causes of audit failure of accounting firms and discuss the measures to prevent audit failure.This paper uses two methods of literature review and case analysis to study the case of ZZ accounting firm’s audit failure on FG company.There are four main manifestations of ZZ accounting firm’s audit failure on FG company: inventory supervision procedures and analysis procedures are not implemented in place;Failure to pay attention to the abnormal situation of data related to operating costs;Neglecting the internal control of the company;The audit evidence of construction in progress and fixed assets is not sufficient.According to the performance analysis,there are four reasons for audit failure:CPA’s lack of due professional suspicion,failure to be diligent and responsible,continuous audit easy to ignore risks,and audit quality control is not strict enough.In view of the reasons for the audit failure,the audit opinions are put forward from two aspects.First,certified public accountants should pay attention to the standardization of inventory supervision procedures,make rational use of analysis procedures,improve professional competence,strengthen the understanding of the iron and steel industry,fully verify abnormal data,reduce the dependence on information provided by enterprises,and strengthen the risk oriented audit concept.Second,accounting firms should avoid continuous auditing,reasonably arrange auditors,make appropriate use of expert work,attach importance to the undertaking and maintenance of audit services,and strengthen the quality oriented firm culture.It is hoped that this paper can make some contribution to enriching the research on audit failure of iron and steel firms,and play an enlightening role for accounting firms to audit iron and steel enterprises in the future,so that accounting firms can better provide services.