Research On Auditing Failure Of Accounting Firms

Information asymmetric is common in the society,especially in the modern companies.Deviation between owners and managers in receiving and transferring the information results in the separation of the managerial authority and the ownership.The auditors audit to provide the factual and reliable audit reports and information for the owners of companies.Besides,they provide feedback about the ways managers manage the company and its business operations of a company to the owners so that the right to know of owners can be assured,which prevents the owners from making wrong decisions because of the wrong information given by the managers.We are in an area full of big data and information explosion.The economic environment is complicated,therefore the owners of companies and the potential investors increasingly focus on the growing demands for economic information.Therefore,the factual and objective audit reports play a significant role in helping the public to make right decisions.However,the audit industry is not as vigorous as it seems to be.Many problems that audit reports can't reach the standard occurs.And a lot of audit failures happen not only at home but at abroad.So,it is essential to study the audit failure.The paper firstly concludes the research results about the audit failure done by others,sorts out the related basic theories,such as the Principal-Agent Theory,the Fraud Triangle Theory,and the Audit Conflict theory,and explain the negative effects caused by the the audit failure.Then,in order to study the role played by REANDA in this audit failure and estimate the problems might be caused by the certified public accountants in the auditing process,the paper analyzes the cheating ways used by Sinovel Wind Group Co.,Ltd.Based on the case study,we can find the reasons that the accounting firms and the certified public accountants fail to do audit analysis,and provide some practical suggestions about how to lessen the audit risks in the auditing process for the Accounting firms so as to reduce the audit failures.The paper will help to make the auditing environment clean and improve the auditors' work capacity,which will preventthe audit failure and provide solutions for finishing audit work with high-efficiency and high-quality.