A Case Analysis On Ruihua Certified Public Accountants' Audit Failure To The IPO Fraud Of Liaoning Zhenlong

In order to maintain the healthy and smooth operation of the Chinese securities market,securities regulatory authorities have imposed stricter conditions on companies that require initial public offerings(abbreviation:IPO)to be listed,these conditions cover "subject qualification","finance and accounting","equity and public shareholding" and many other aspects.Subject to these strict conditions,in order to achieve the goal of listing,some companies that did not meet the standard used a series of seemingly sophisticated methods to attempt fraudulent listing.such as fictitious income,transfer costs,less impairment,manufacturing non-recurring gains and losses and so on.In response to the above frauds,China's regulatory policies require:companies that want to IPO,their first three years and the first season's financial statements must be audited by certified public accountants of accounting firms with securities and futures qualifications,and Obtaining a standard unqualified audit report.CPA is a very important defense line for supervisory departments to prevent inferior companies from disturbing the order of capital market,it is of great significance to ensure the healthy operation of market economy and ensure the quality of accounting information.However,due to various factors,the CPA IPO audit failed from time to time,the public questioned the professionalism and authority of certified public accountants.The audit opinion issued by a certified public accountant will objectively influence investors' investment and decision-making,false audit opinions will cause investors to suffer losses and encourage the capital market to misappropriate money and cheat money.Therefore,it is of great value to improve the auditing quality of certified public accountants and standardize the auditing market by collecting the cases of failed IPO audits,conducting detailed analysis of the causes and drawing relevant conclusions and enlightenments.This article uses the general idea of raising,analyzing and solving problems,combining the theoretical knowledge with the cases of Liaoning Zhenlong IPO fraud.First of all,this article introduces the background and significance of the research,and summarizes the relevant literature and literature review,clear the whole article research ideas,methods and framework.Secondly,the article expounds the connotation of the audit failure and its relationship with the related concepts.Then it lists the characteristics and procedures of the IPO audit as well as the general reasons for the IPO audit failure.At the same time,it provides a theoretical explanation and paves theway for the following theoretical basis.In the part of the case,Liaoning Zhenlong is chosen as the representative.Through the review of the fraudulent conduct,the performance of audit failure and the result of the punishment,we found that the company was subtle in its fraud and had strong motivations for fraud,as well as deficiencies in internal control and corporate governance.In addition,the auditors of this case also have many problems,such as not maintaining professional suspicion,insufficient practice ability,not fully implementing the risk-oriented audit concept,gradually losing independence,organization management model and IPO audit quality control system were not sound.Coupled with the intense competition in the firm,industry regulation is not in place,the audit commission system defects,imperfect laws and regulations and other industry macroeconomic factors can easily lead to audit failure.Finally,on the basis of summarizing the previous article,the author draws five conclusions from this article.The direct reason for the failure of IPO audit in this case was the lack of independence and insufficient investment of CPA,the important reason was that the quality of the certified public accountants' own quality and practice quality were low,the indirect reason was that the accounting firm risk and quality control system is not perfect,the objective reason was that Liaoning Zhenlong conducts highly concealed financial frauds for successful IPOs,the external causes were IPO auditing external environmental defects and administrative supervision loopholes.In view of the above conclusions,in order to improve the quality of IPO audit and reduce the risk of failure of IPO audit in the future,this article puts forward personal enlightenment on preventing IPO fraud from three different perspectives: CPA and firm,IPO company and industry environment,,including:improve the independence and practicing level of CPA IPO audit process,sound accounting firm IPO audit quality control system,optimize IPO internal control and governance structure,innovative IPO audit appointment and fee system,perfect IPO supervision system and civil compensation system,a total of five aspects.This article mainly used the case analysis method,a typical case of "Liaoning Zhenlong IPO fraud" as the material,through detailed elaboration,analysis and anatomy,summarizes the reasons for the failure of the IPO audit in this case,finally draws conclusions and sums up personal inspiration and puts forward some feasible suggestions.At the same time,supplemented by the literature review method,fully reviews relevant literature at home and abroad,summarizes the audit failure and IPO audit theoretical,and lay a solid theoretical foundation.The author hopes to improveand develop the related theories from the perspective of IPO audit,enhance the information transparency and information quality of the proposed IPOs,and promote the sound and healthy development of the securities market in the future.Achieve the purpose of guiding the development of certified public accountants in the audit industry and contribute to the industrial reform of the socialist market economy in China.