A Case Study Of Audit Failure On Reanda Auditing Sinovel

Auditing is the product of social and economic development.With the separation of ownership and management of enterprises,the degree of information asymmetry is increasing.In order to alleviate the information gap,the accounting firms came into being.In recent years,the frequent audit failure case not only challenged the actual function of "information risk reduction",but also severely undermined the independent and professional image of accounting firms,which has brought a serious blow to the auditing industry.Whether foreign "Enron" and "Toshiba" event,or domestic "Zhangzi Island" ?“Hithink Flush Information Network” and "XinTai Electric" have an indelible impact on accounting firms.What caused the audit failure repeatedly? Why do professional auditor fail to function? How to effectively avoid the occurrence of audit failure? All of this are the realistic problems at present.This paper makes a summary and analysis of 31 typical cases of audit failure from 2008 to 2017,On the basis of combing and analyzing the common factors that lead to audit failure,trying to draw the regular of audit failure.On this basis,Sinovel as a case study,combined with the industry characteristics of the wind power industry,increasing the practical significance of the research.This article will sort out the concepts of audit failure,combined with the case of the Case Study of audit failure on Reanda auditing Sinovel,at the same time,find out the problems in audit process and provide corresponding solutions.By analyzing and summarizing the causes of the problem of audit failure on Reanda auditing Sinovel,we provide some experience and suggestions for the healthy development of auditing in the future,at the same time improve the related research on accounting information disclosure of auditing in China,and achieve the combination of theory and practice.This article first describes the definition of audit failure.In this article we adopt the audit process failure theory which refers to the CPA not accord with the requirements of the audit criteria strictly in the audit process,And not find any major omissions in the report omission,resulting in the audit report does not correspond with the facts.On this basis,the author summarizes three main characteristics of audit failure,including the CPA fail to abide the general auditing standards and norms strictly,Most audit failures accompany the financial fraud of the audited entity and the result of the audit failure eventually published the opinions that was inconsistent with actual situation.At the same time,the author introduces the principal-agent theory,audit conflict theory and information asymmetry theory.All of this provide the basis for the later discussion of audit failure on Reanda auditing Sinovel.Secondly,this article takes the case of audit failure on Reanda auditing Sinovel as an example.Mainly introduces the basic Situation of Reanda and Sinovel as well as case reviews.The methods of financial fraud of Sinovel mainly include inflated profit by confirming wind turbine income in advance,the failure to accrue bad debts and freight as well as the frequent replacement of accounting firms.In the analysis of Reanda audit,mainly from the implementation of risk assessment procedures,internal control testing,the implementation of the income cycle and analysis of the implementation of four procedures.Finally,through the CSRC's punishment of Reanda and Sinovel,the results of audit failure are described.In addition,It's worth mentioning that this part is the important chapter in the article.Thirdly,analyze the reason for audit failure.From three perspectives of accounting firm,audited entity and audit industry environment,combined with the specific case to deeply dig the reason of the audit failure.Based on the combination of internal and external factors,the reasons for these problems are analyzed in depth.Mainly include the lack of professional competence,the lack of professional doubt on abnormal financial data,the internal quality control of firms are flawed.From the audited entity,the financial situation deteriorated and the internal financial frauds existed in the audited units.From the external environment of the audit industry,the audit employment mechanism has its own defects,and the asymmetry of the cost and income of the violation is also an important external factor for the audit failure.Finally,based on the conclusion of the research conclusions about audit failure on Reanda auditing Sinovel,the author summarizes the relevant experience,sort out the enlightenment to prevent audit failure.By summing up the relevant experience,we can see that improving the internal control of the audited entity,strengthening the professional ethics of auditors,improving the quality control of the firm and improving the audit environment should be taken to avoid audit failures.