The Cause And Consequence Of Audit Failure By Zhongxing Hua Certified Public Accountants LLP

Not only did audit failure makes the credibility of accounting firms and certified public accountants decline sharply in the public mind,affecting the survival and healthy development of the accounting profession.It also damaged the credibility of the capital market,incurred the vast number of investors suffered huge economic losses.And it has brought the serious negative impact to social and economic development.Bo yuan Investment co.,LTD.(hereinafter referred to as the “Bo Yuan Investment”)is the first enterprise that was forcibly delisted because of the new delisting system since 2014.Its mainly illegal behaviors are illegal disclosure of information and financial fraud.It acts as the long time span,high frequency and the huge amount.It has a bad influence on the market and investors.As one of the supervising agencies of Bo Yuan Investment in financial reporting,Zhong Xing Hua accounting firms continuously provided 7 years of audit service since 2007 for Bo Yuan Investment.During the audit they didn't report the illegal behavior of Bo Yuan Investment,which incurred the audit failure happened.Therefore,it has great practical significance about studying on the failure case of Zhong Xing Hua audit Bo Yuan Investment.On the basis of reviewing and summarizing the domestic and foreign scholars' audit failure and related theories,this paper uses the method of comparative analysis to explorethe causes and economic consequences of auditFailure from two aspects of the firm and the CPA.Specifically,according to Bo Yuan investment over the financial situation and audit,in order to further examine the causes of the failure of audit,the article compared the audit firm industry expertise,audit experience,industry market share,the audit fee and audit tenure with the industry average.In addition,this paper also analyzes the impact of before and after audit failure on accounting firms from the number of audit firms,audit fees and audit quality.Through the study of failure cases of Zhong Xing Hua audit Bo Yuan Investment,this paper found that the auditors'(including CPA firms and individual level)low audit ability and the lack of independence are the key reasons of audit failure.So that the independent audit fails to play the due role of supervision.Through the research on the economic consequences of Zhong Xing Hua Certified Public Accountants audit failure,this paper found that audit failures does not lead to significant negative economic consequences for the firm,either improve audit quality.The revelation of this study is that accounting firms and certified public accountants person can take warning.Learn from it and improve their professional competence and independence in audit work.