The Responsibility Of CPA To Discover And Report The Financial Fraud Of Corporation

The exposure of Enron scandal and continual listed companies'financial fraud cases had made the whole society to evaluate the validity of the CPA auditing system. The Sarbanes-Oxley Act of 2002 has introduced a series of reform in supervision of accounting, independence of auditing, disclosure of financial information, legal liability of security analysts in breaching of laws or regulations. The supervision departments of our security market had strengthened the power of supervision and the punishment to the illegal CPAs and managers of listed companies, but that does prevent the financial fraud cases from keeping happening.This paper, based on the conception of institution of Masahiko Aoki, by the institution factors analysis method to demonstrate the factors of CPA auditing system further, and come to a conclusion that the common belief of CPA auditing system is to prevent and eliminate the fraud of security and the belief of CPA, which is the most important participant of CPA auditing system, is to discover and export the financial fraud of corporations, so this profession has the professional duty to do that, which has been always refused by the whole CPA profession. So the exposure of financial fraud would indicate the CPA auditing system failure. But the civil responsibility from the public would compel them to take on the professional duty continually. This paper consider that the key method to resolve the failure of CPA auditing system is that the CPA profession should take on the professional duty positively and the Institute of CPA should communicate well with the legal and supervision department and the public to distinguish the auditing responsibility and the accounting responsibility, and to build a better public legal dissension resolving system to protect the interest of the CPA professional, and to resolve...