The Research On Problems Of CPA Audit Quality

In recent years, Certified Public Accountants and the CPA firms in China have a fast growing speed and they make a due contribution to the development of economic. However, because of the lack of CPA's professional competence and the absence of professional ethics or other reasons, there have been many major audit failures which have brought immeasurable loss to China's capital market. According to the penalty notices made by the Ministry of Finance and the Audit Commission in recent years about certified public accountants and the CPA firms, there are some problems very seriously in the current annual audit of listed companies in China. The crisis of public confidence in CPA has made a huge threat to the survival and development of the CPA industry. As audit quality is the core of the sound development of the CPA industry, it becomes one of the key issues need to be resolved by the current capital market as well as CPA profession that how can we improve the quality of the CPA's audit.Firstly, this paper reviews and evaluates the research results of domestic and foreign scholars on the quality of audit, summers up the meaning and characteristics of audit quality and emphasizes the need to strengthen audit quality. Secondly, the paper makes a much more comprehensive and integrated analysis about many factors on the audit quality of certified public accountants from the four aspects of CPA firms, certified public accountants, the audited enterprises and the audit environment. Thirdly, on the base of the factors analysis and the status and problems of audit quality of China's CPA, this paper indicates the reasons for the low quality of audit:small CPA firms with low reputation and unperfected quality control system, absence of independence or professional capacity of certified public accountants, lack of effective corporate governance structure of the audited enterprises, and the audit environment is to be improved. Fourthly, on the base of the factors analysis above and the reasons put forward, the paper puts on some advices to improve the CPA audit quality: promoting the CPA firms to become bigger and stronger with an improved control system on the audit quality, strengthening the CPA's independence and professional competence, establishing an effective corporate governance structure for the audited enterprises, and improving the CPA's audit environment. Finally, this paper confirms the research methods of factor analysis and the conclusions of improving measures by the financial fraud case of Satyam in Indian exposed in 2009.