Study On Audit Failure Of Listed Companies

With the growing maturity of China’s capital market,people gradually realize the importance of audit quality,and increase demand for audit,certified public accountants receive more and more attention as the "economic police" to verify the authenticity,legitimacy and fairness of listed company’ financial information.Due to the continuous expansion of listed companies and the increasingly complex business involved,financial fraud means of listed companies emerge one after another,the difficulty of CPA audit is increasing,which makes the possibility of audit failure increasing.On the one hand,audit failure will cause serious economic losses to investors;on the other hand,it will seriously affect the accounting firms and certified public accountants’ reputation,and even leads people to question the professional ethics of accounting firms,brokes the relationship between the auditing industry and the publicm,and affectes the healthy development of the capital market.Therefore,it is very important to explore audit failure’ causes and preventive measures,in order to promote the healthy development of the audit industry.In 2018 a number of audit failure cases,this article chooses rui hua certified public accountants audit failure case in kunming machine tool for the following reasons: first,kunming machine tool financial fraud is a case of senior executives collusion fraud,study this case is conducive to prevent the occurrence of senior executives collusion fraud.At the same time,the study of kunming machine tool audit failure cases,is conducive to the prevention of audit failure.Second,the ruihua accounting firm ranks high in the comprehensive ranking of Chinese accounting firms,however,the CSRC has punished ruihua accounting firm for many times in recent years,indicating that the audit quality of ruihua accounting firm needs to be improved,and there are some problems in the audit quality control.The study on the audit failure of ruihua accounting firm is conducive to improving the audit quality of the accounting firm and reshaping its credibility.This paper first summarizes the literatures of domestic and foreign scholars on audit failure,and on this basis,summarizes the administrative penalties imposed by China securities regulatory commission on accounting firms from 2010 to 2018,and analyzes the reasons for audit failure.In this paper,using the case method,analysis of kunming machinetool audit failure consequences,the financial fraud means,and using the theory of modern risk-oriented audit,from the accounting firm and certified public accountants,the auditees,social environment,the author analyzes the reasons of audit failure found three aspects.Audit failure will increase the business pressure of the auditee,reduce the industry reputation,reduce the reputation of accounting firms and certified public accountants,and cause economic losses to investors.The reasons for the audit failure are as follows: public accounting firms and certified public accountants blithely accept audit services,not fully understand the auditees and environment in the evaluation of risk,not implement effective audit procedures to deal with risks,not diligently,not keep professional scepticism,accounting firm quality control is not strict;The management level of the audited company lacks integrity and ethics,and the internal control of the company is weak.In terms of social environment,China’s audit market environment is unhealthy,supervision and punishment are insufficient,and the cost of violation is low.According to audit failure reason paper from three aspects puts forward some Suggestions of preventing audit failure: certified public accountants and certified public accountants must be cautious to undertake audit services,to fully understand the internal and external environment of the auditees and risk assessment,perform effective audit procedures,be diligent and responsible,and maintain due professional skepticism of financial information provided by the audited entity at all times,certified public accountants should improve the system of quality control at the same time,strictly control the audit quality.The auditees should establish a corporate culture with honesty and ethics as the core,strengthen the integrity education of employees,especially senior executives,reduce the possibility of financial fraud,strengthen internal control construction,and improve the internal supervision mechanism of the enterprise.In terms of social environment,it is necessary to curb vicious competition,improve the auditing market competition environment,strengthen industry supervision,and increase penalties for violations of laws and regulations.