Prevention Of Improper Audit Procedures

In recent years,audit failure cases have occurred frequently.After many financial fraud cases have been exposed,accounting firms,as independent third-party institutions,have failed to play a role in revealing financial fraud and have an inescapable responsibility.The author makes statistics on the accounting firms that were administratively punished by the China Securities Regulatory Commission from 2018 to2022,and finds that all the accounting firms that were punished during the period were involved in improper audit procedures,indicating that improper audit procedures were the main reason for audit failure.It is very common for accounting firms to be punished many times,which shows that the problems related to accounting firms have not been completely solved after administrative punishment,and also reflects the current situation of the audit industry.The audit quality is questioned by the public.Therefore,in order to improve the quality of audit work and reduce the recurrence of similar audit failures,it is urgent to study the audit procedures of accounting firms to ensure the stable operation of the economic market.Based on the signal transmission theory and risk-oriented audit theory,the paper uses the literature research method to draw lessons from the domestic and foreign research results on the performance,causes,Preventive measures and audit failure of audit procedures,and adopts the case study method to select the case of the failure of Dongfang Jinyu audited by Dahua Institute.Because Dahua Institute is the illegal firm in the latest administrative penalty announcement,and the audited unit Dongfang Jinyu is in a special industry,the transaction background is complex,and the conventional audit utility is limited,the analysis of the audit subject and object behavior of the case is typical and practical reference significance.Taking the procedural misconduct in the audit process of Dahua Institute as the research object,it alerts other affairs and contributes little to improving its audit quality,in order to reduce the probability of audit failure.This paper reveals the exposure process and fraud means of Dongfang Jinyu ’s financial fraud case,studies the improper performance of Dahua ’s audit procedure,and analyzes the reasons.It is found that it mainly includes the lack of risk awareness of certified public accountants,the lack of diligence and professional suspicion,the lack of strict implementation of the quality control review system of the firm,the deliberate concealment of the audited unit,the fierce competition in the firm industry,the low cost and lag of illegal costs and other factors.Finally,we put forward targeted preventive measures and suggestions for these reasons.First,CPAs enhance risk awareness and use data analysis to identify and evaluate the risk of material misstatement;the second is to maintain professional suspicion of possible fraud anomalies such as transaction authenticity,implicit related party relations and correspondence;third,improve the firm review system and supervise the implementation;finally,the external environment for improving the audit was supplemented,including the regulatory authorities and firms to increase the supervision of listed companies to reduce the space for their financial fraud,standardize the competition in the accounting firm industry and increase the penalties for firms and certified accountants and shorten the punishment cycle.Through the case study of Dongfang Jinyu audited by Dahua,we hope to expose the common problems in the audit process of similar firms,enhance the risk awareness and professional caution of certified public accountants,and provide corresponding basis for further improving the quality of audit work.