Study On The Reasons And Preventive Strategies Of Accounting Firms' Udit Failure

In recent years,the capital market fraud incidents occurred frequently,accounting firms and their CPAs were punished by China Securities Regulatory Commission because of the audit failure,and then the public begins to concern about the audit work of CPA.Audit failures not only cause huge losses to investors,but also discredit accounting firms and CPAs.According to the statistics disclosed on the official website of China Securities Regulatory Commission,there are still plenty of accounting firms being given administrative penalties every year.In 2017,there were6 cases of audit failure.Among the punished accounting firms,Reanda accounting firm failed to perform its duties diligently in the audit process,resulting in many audit failures,including 7 times in the past decade,there were 5 times in 4 consecutive years from 2014 to 2017.As a result,the audit failure problem has caused heated discussion in the theoretical and practical circles.Over the years,many scholars have carried out a variety of analyses on the performance,characteristics and causes of audit failure,and the ultimate goal is to put forward constructive countermeasures to reduce or even avoid audit failure.Based on the modern risk-oriented audit,this paper uses the literature research to summarize the existing research at home and abroad,and combined with the current provisions and reality of China's accounting firms,introduces the concept and characteristics of audit failure.Based on the statistics of administrative punishment announcements made by China Securities Regulatory Commission in recent ten years,this paper analyzes the status quo and characteristics of audit failure of accounting firms in China by induction and contrast method,which builds the foundation for the following analysis.Finally,typical cases are selected and analyzed with case analysis method.In the audit failure cases of recent ten years,the audit of Reanda to Jiuhao Group was relatively serious and not far,so it was selected as the research object.Under the guidance of previous theoretical research,combined with this practical case,analysis of the problems of Reanda in this audit failure,and proposed effective countermeasures.The causes of audit failure are various,but this paper argues that the auditees financial fraud and ineffective industry regulatory environment are not the sufficient and necessary condition for audit failure.Therefore,it is based on the accounting firm and CPA as the auditing entity.After analyzing the reasons for audit failure from the perspective of accounting firms and CPAs,this paper argues that the main problems of accounting firms are that they do not strictly implement preliminary business activities,the quality control of the business is not strict,the management of the branch is weak,and the firm Insufficient partnership culture construction.The main problem of CPAs are: When conducting risk identification and assessment,the operation status of Jiuhao Group and the status of the industry are not well understood.In the process of executing audit procedures and obtaining audit evidence,they did not perform diligently and conscientiously,lacking professional competence,professional suspicion and professional cautiousness.Finally,for the reasons,this paper proposes to the accounting firm to improve the risk of undertaking the business in a comprehensive and cautious manner,strengthen the quality control of the firm,and establish a specialized agency to strengthen the management of the branch office.Strength,strengthen the construction of partnership culture by establishing a humanized management model.In the process of performing the audit work,the CPA should conduct a comprehensive risk assessment and identification of the audited entity and its industry environment,and conduct professional skepticism and prudence throughout the audit process,and obtain sufficient information through reasonable design and strict implementation of the audit procedures.Appropriate audit evidence should also strengthen self-learning,actively participate in audit training,master solid professional knowledge,and accumulate rich work experience.Through research and analysis,this paper hopes to help Reanda to prevent audit failures in future audit work,and the relevant entities in the industry can also draw lessons and learn lessons,and light up the future of audit work,reducing even avoid audit failures.However,most of the data information involved in this study is obtained through public channels,and the internal data acquisition of accountingfirms is limited.Furthermore,since this paper selects typical cases for research,the enthusiasm for the analysis and recommendations of individual case analysis remains to be determined,so this article also has many shortcomings.