Research On Audit Independent Defeats And Financial Statement Insurance In China

In recent years, the independence was greatly doubted by public because of the emergence of a great deal distortion of auditing information at home and abroad. Researches show that primary cause for audit defeats is independence lost of chartered accountants, which is due to flaw of present audit commission system. It is a new direction of innovations in audit relationship that to introduce "the fourth party", who is independent to both managers and shareholders in the project of solving the problem of audit independence and clientage in auditing. In 2002, financial statement insurance brought up by Joshua Ronen, in which the auditor was engaged by insurer, was mostly supported. As a new independent audit commission system, financial statement insurance (FSI) is still in theory study stage. We should constantly reform and improve the related measures in order to put FSI into practice and take some effects. So, the paper will make the further study about FSI according to our national conditions, and put forward idea for solving the problem of audit independence.Firstly, based on studying of the related literatures, the paper briefly expounds the related theories and its relationship with the independent audit. It also analyses the independent audit commission system and the balance relationship with the audit independence, which form the theoretical basis for this study.Secondly, based on analyzing the present situation of independent audit and the influencing factors in china, the paper draws a conclusion that the primary cause for the absence of audit independence is the imbalance of audit agency relationship. So, it is necessary to further rationalize the relationship between the audit agencies and change the present audit commission system. At present, it is a new direction of innovations in audit relationship that to introduce "the fourth party". The main reform models include Audit Committee System,Bidding System in Stock Exchange and Financial Statement Insurance. Through comparing of the three reform models, Financial Statement Insurance becomes a more acceptable mode of reform for its unique advantages.Finally, this paper describes Financial Statement Insurance in detail and solves the problem of audit independence from the Financial Statement Insurance angle of view. Starting from the basic theory of FSI, the paper summarizes its defects, carries on the structure and procedure adjustment based on FSI, and proposes some concrete measures to enhance its suitability. And also, in order to enhance the possibility of converting theory into practice, the paper analyzes the external regulation mechanism and information disclosure system of FSI.