A Study On The Failure Of Certified Public Accountants In China

With the development of market economy, people pay more attention to the quality of audit report, CPA industry also plays a increasingly vital role in the market. The CPA known as "the economic police" should shoulder the responsibility of economic supervision. However, the constant occurrence of audit failure events harm the image of CPA and the entire audit industry in the public. In the past years, Green Land Biotechnology, Wanfu Biotechnology, Kelong Electrnoic and other audit failures confronted to the punishment from the China association of certified public accountants and China Securities Regulatory Commission. This paper focus on the study of typical case company’s financial statements audit failure, then propose the countermeasures to prevent audit failure in order to reduce the audit risk of CPA.This article first states the background and meaning of audit failure, and also analysis the review of the issue. The second part expounds the theoretical basis of audit failure and defines the relevant concepts. The third part analyzed the penalty decisions on 33 audit failure events from 2006 to 2016 made by China Securities Regulatory Commission, analyzed the status, characteristics and reasons of audit failures. And then this paper takes the audit failure of Dahua on Green Land Biotechnology for example and describes the development of the event, summarizes the reasons of audit failure. The fifth part puts forward the measures to against audit failure, such as improve independence of auditors, improve the corporate governance structure, regulate the behavior of the local government. The final chapter presents the conclusion and the limitations in the study.