Case Study On Audit Failure Of Dahua Accounting Firm To Jiadian Share

With the continuous development of China's capital market,it is the most important way for investors to check the financial reports of listed companies.Therefore,the information quality of financial reports is particularly important.Certified public accountants(CPAs)are called "economic policemen",whose duty is to objectively and impartially verify the financial status and business activities of audited units entrusted by audit clients.However,in recent years,the emergence of new earth,Jinya Science and Technology,Jiadian shares and other audit failure cases has caused the public to question the professionalism and impartiality of CPAs,hindering the healthy development of the audit industry.Therefore,exploring the causes of audit failure and putting forward countermeasures to prevent audit failure is of great significance to our audit industry.This paper studies the failure of auditing Jiadian shares by Dahua Accounting Firm.Firstly,this paper summarizes the relevant research results of domestic and foreign scholars on audit failure to better study the case.Secondly,this paper elaborates and analyses the risk-oriented audit theory,information asymmetry(audit)theory,fraud triangle theory,and COSO internal control integration framework to study the theoretical basis of the case.Then,it reviews the audit failure case of Jiadian Share in Huahua Accounting Firm,and combines the theory elaborated above to analyze the reasons for the audit failure of this case,and puts forward the corresponding preventive measures.In this paper,the fraud triangle theory and the internal control integration framework are used to analyze the financial fraud of Jiadian Stock Company,and the risk-oriented audit theory is used to analyze the causes of improper auditing of Huahua Accounting Firm and CPA.Finally,the reasons for the audit failure of this case are concluded as follows: Jiadian Shares' financial fraud leads to higher risk of major misstatement of its own financial statements,increases audit risk and induces audit failure of Dahua Accounting Firm;Dahua Accounting Firm and its certified public accountants fail to comply with audit standards and issue inappropriate audit opinions,which directly leads to audit failure;Loose management and low cost of violation have condoned the occurrence of audit failure to a certain extent.Finally,the countermeasures to prevent audit failure are putforward: the auditees should strengthen the construction of internal control environment;the accounting firms should control the links of undertaking business and strictly implement the internal quality control system;the CPAs should strengthen the risk assessment procedures,carry out audit business around major misstatement risks,and maintain professional suspicion at all times in the process of practice.And professional prudence;the supervision department of audit industry should improve relevant laws and regulations,strengthen industry supervision,and increase the cost of violation of laws and regulations.This paper hopes to study the case of auditing failure of Jiadian Share by Dahua Accounting Firm,and put forward the corresponding preventive measures for this type of auditing business,so as to improve the quality of auditing,reduce the possibility of auditing failure of CPA,and promote the healthy development of auditing industry.