Our Audit Failure Crisis Signal Is Discussed

Since the 1990s, the increasing cases of audit failure has attracted the attention of the academic cricles, the supervision departments and the news madia.The study of audit failure has come to maturity in the developed countries. Although the study is late beginning in China, we have obtained a lot of achievements. We can not agree on the reasons of audit failure with the research results of home and abroad at present. There is not a paper on the crisis singals of audit failure. Therefore, we need research the crisis singals of audit failure. It has significantly theoretical and practicl value. In addition, this article is trying to warn the auditor and prevent behaviors of audit failure.On the base of analyzing the background and meaning of audit failure, the author put forward the definition of audit failure and audit crisis. The author learn the research results of other scholars and carry out researches on the reasons of audit failure. The author do the descriptive statistical analysis of audit failure sample and audit crisis sample with Microsoft Excel. The conclusion is about supervisory tendency, high risk industry, high risk area, high period etc from 2002 to 2007. This author discuss the dominant signals and recessive signals of audit failure by the audit environment, audit object , audit entity angle.The signals of audit crisis include the holding rate of largest shareholder, auditor tenure, accounting frim tenure, audit fees, management/directorate structure, the area of listed company, whether the largest shareholder is the state or not. The signals of audit failure include the holding rate of largest shareholder, management/directorate structure and audit fees. The difference are auditor tenure and accounting frim tenure. Finally, on the base of the results with statistical analysis , t-test and Chi-square test, the author summarizes the present situation and problems, absorbs foreign advanced experice, and puts forward a lot of policies to the auditor, accounting frim and supervision department. This article is trying to perfect supervision system.