A Study On The Audit Failure Of The First Share Of Forced Delisting "Xin Tai Electric"

With the rapid development of capital market and the increasing demand of investors for high-quality financial information,the audit report issued by CPA has become the focus of the society.However,the audit failure cases occurred in recent years,such as Wanfu Biotechnology,Xintai Electric,Sinovel and so on,have damaged the normal operation and development of the capital market,infringed on the vital interests of investors,and caused adverse social effects.It causes the public to question the credibility of CPA,and the reputation of CPA firms is greatly damaged.Many experts and scholars to study and have put forward some effective suggestions,but with the development of economy,the environment of audit is becoming more and more complex,and the new situation and new difficult problems appear in the process of auditing more and more.Therefore,the study of audit failure in the new situation has an important practical significance.On the basis of literature review at home and abroad,this paper analyzes 36 administrative penalty decisions on audit failure made by CSRC in the past ten years,and summarizes the present situation,characteristics and main causes of audit failure of CPA in China.Based on the case study of Xintai Electric,the first stock of forced delisting in China's capital market,Beijing Xinghua Accounting firm failed to take due diligence in the audit process of IPO and its annual report after listing,and finally failed in continuous audit.This paper mainly studies the audit failure cases of Xintai Electric from four aspects:firstly,the main fraud methods of the audited units include the "three axes" of fictitious receivables recovery,a large amount of scarlet letter sterilisation to adjust the operating cash flow,deduce cost,reduce provision for bad debts,etc.Secondly,In the audit of Beijing Xinghua,there are some specific problems such as the lack of complete letter proof procedure for accounts receivable,the lack of due attention to the large amount of scarlet letter sterilisation,the improper auditing procedure of currency funds,and the unrational use of analytical procedures.There are obvious defects in governance structure of audited units and internal controls;and vicious competition in audit industry,Employment mechanism is not perfect and regional protectionism;Thirdly,thedeep reason of audit failure mainly lie in the independence of certified public accountants lack in essence,failed to identify fraud risk,lack of professional ethics and professional competence,firms lack the necessary audit quality control;There are obvious defects in the management structure and internal control procedures of the audit unit;The audit industry has a vicious competition,imperfect employment mechanism,and local government protectionism.Finally,according to the research content from the certified public accountant and office,the auditees,society and industry environment three aspects put forward to avoid audit failure related Suggestions,hoping to improve the audit quality.