On The Civil Liability For Compensation Of Misrepresentation Made By CPA In China

The audit report issued by the certified public accountant is the main basis for investors and other stakeholders to evaluate the company's financial situation.However,in recent years,the frequent occurrence of audit failures at home and abroad has led to another crisis of public trust in the CPA industry.The act of misrepresentation made by CPA directly leads to the result of audit failure,which includes publishing wrong audit opinions and issuing false audit reports.When an investor causes losses due to a misrepresentation made by a CPA,the CPA should bear the civil liability for compensation.However,once misrepresentation occurs,Chinese CPA has received administrative penalties,but has borne civil liability for compensation rarely.In order to protect the legitimate interests of investors better and make investors get due compensation for their losses,it is necessary to re-examine the civil liability for compensation of misrepresentation made by CPA.Select investors claim money from BDO China Shu Lun Pan Accounting Firm as a case,this paper has a detailed analysis of the defects of the civil liability for compensation of misrepresentation made by CPA and the cause of the defects,and through the comparative analysis of similarities and differences between domestic and foreign civil liability for compensation of misrepresentation made by CPA,it aims to absorb the essence of foreign legal system and abandon the backward theories and methods in China,to put forward suggestions for improvement in line with current situation.In China,the main undertaker of civil liability for misrepresentation is an accounting firm,but the person directly responsible for the misrepresentation is CPA,and CPA almost has never been borne civil liability for compensation.The reason is that Chinese laws and regulations do not list CPA as the direct subject of civil liability for misrepresentation.Since there is no legal provision that directly lists CPA as the subject of civil compensation for misrepresentation,CPA can often escapes civil liability in civil litigation cases,and CPA in BDO China Shu Lun Pan Accounting Firm is not an exception.This paper believes that CPA is the direct responsible persons in the auditing practice,and CPA should be directly responsible for the misrepresentation.Therefore,this paper innovatively proposes to establish the responsibility sharing mechanism between CPA and accounting firm,and adopt the method of joint liability,average allocation or comparative allocation to apportion the civil liability for compensation of misrepresentation between CPA and accounting firm.Through the case study,this paper comes to the conclusions that the current Chinese CPA doesn't bear civil liability for compensation of misrepresentation,the relevant legal system is not perfect,and it is difficult for investors to claim compensation.In order to maintain the stability of the securities market and promote the audit quality of CPA,this paper puts forward some suggestions that can be referred to when formulating relevant laws and regulations.First,CPA must be listed as the subject of civil liability for misrepresentation.Second,the relevant departments should confirm whether the pre-procedure of civil litigation has been canceled in the actual trial of the case,and improve the relevant laws and regulations to speed up the cancellation of the pre-procedure of civil litigation;Third,increasing the punitive indemnity provisions for CPA to further compensate for the investors' losses;The fourth is to improve the method of distinguishing the degree of fault of CPA to provide a theoretical basis for the court to deal with cases of misrepresentation made by CPA.