The Study On Audit Failure Of CPA In Our Country

Since the 1980s, with the stable and rapid development of socialist market economic construction in our country, especially the rapid development of capital market, the occupation of our country's certified public accountant has obtained rapid development. It has become an essential and important constituent in macroscopic monitoring mechanism of our country's socialist market economy. However, in the recent years, the cases of audit failure emerge one after another frequently: in 2001, "Enron case" of the United States had led the Arthur Andersen accounting firm ruin; in 2001, YinGuangXia had recorded the most amount of accounting fraud, ZhongTianQin accounting firm retreated from the historical stage; in 2005, "KeLong incident" broke out; in 2006, Deloitte and Touche accounting firm was summoned by CSRC. Then, what is the audit failure? Why the CPA audit failure emerged in our country? What is the real reason for the audit failure? How should we prevent and control the occurrence of audit failure? Those are what this paper researches on and trys to answer. According to the procedure of raising, analyzing and solving problems, the paper researches on audit failure. First, the paper expounds the definition of the audit failure, then analyzes the consequences of audit failure and points out that audit failure can bring serious consequence not only to certified public accountants, but also to the accounting firm, the capital market and the society as a whole. According to the theory of Institutional Change and path dependence in Institutional Economics and principal-agent theory in Information Economics, the factors causing audit failure are analyzed, which are divided into exterior factors and internal factors according to the whole occupation of certified public accountants. Exterior factors include national politics, law ,culture and so on, while internal factors includes the audit professional organization's management pattern, the accounting firm's scale, audit personnel quality and so on. This paper holds that the occurrence of audit failure cases is influenced by both exterior factors and internal factors. At last, this paper proposes that in order to avoid the occurrence of audit failure, we should establish the audit committee system, increase legal penalties, enhance the level of cultural audit, improve the supervision and management of industry of certified public accountants, improve the audit market competition and personal qualities.