Case Analysis On Audit Failure Of Lixin Accounting Firm Auditing Kanghua Agricultural

With the development of the economy,the CPA industry has also ushered in rapid progress in recent years.As an important reference for investors to make investment decisions,corporate owners' evaluation of managers' management level and government's economic policy,the audit issued by certified public accountants.The role of reports in society is becoming more and more important.However,with the deepening of economic globalization,the business of the company has continued to expand,the fields involved have become more and more,the flow of capital has become more and more complicated,and the audit work has become more and more difficult.Auditors are required to continuously learn new knowledge and national policies,understand the operating conditions of the audited entities,and use new auditing methods and procedures purposefully.If the auditor does not keep up with the times during the audit process,he still uses the original audit procedures and methods to audit the new business,or does not pay attention to the changes in the auditing standards or national policies,and does not understand the emerging industries.The audit results naturally It is difficult to achieve the expected results,and the audit risk is also revealed.This has led to the frequent occurrence of audit fraud and audit failure cases in recent years,and the audit failure is likely to lead to investors' investment decision mistakes.The evaluation lost its fairness and so on.For the entire auditing industry,audit fraud and audit failure will make financial information users lose trust in the audit report issued by certified public accountants,and the lack of trust will have a serious impact on the development of the industry,hindering the development of the industry,such as in recent years.The occurrence of such incidents as "Enron" and "Green Earth" directly caused financial information users to have doubts about the quality of audit reports issued by certified public accountants.Therefore,the study of audit failure has important implications for the development of the CPA profession.At present,domestic and foreign scholars have conducted a lot of research on audit failures.The existing literature research finds that the reasons for audit failure may be multi-faceted.First,it may be the reasons for CPAs and accounting firms,such as certified public accountants.In the course of the audit,the necessary audit procedures are lacking,the firm does not perform a reasonable assessment of the audited entity before the audit project is implemented,and on the other hand,the audited entity and the entire industry environment will also have an impact on the audit failure.Thefinancial unit of the auditing unit,the competition in the industry is not standardized,and the penalties are insufficient.The quality of the audit report issued by the CPA is an embodiment of the auditor's business ability and an important reference for investors to make investment decisions.Therefore,audit failure will also have an important impact on the relevant personnel.On the one hand,audit failure will cause CPAs and accounting firms to bear corresponding legal responsibilities,and suffer legal and administrative penalties,which will also affect the reputation of accounting firms.On the other hand,audit failures can lead to unfair performance evaluation of the audited entity,causing investors to make false investment decisions based on wrong audit reports and lead to investment failure.At the same time,audit failures can also bias the formulation and implementation of government policies.Through the study of the case of the failure of the accounting audit of the Huanhua Certified Public Accountants,the reasons for the audit failure were mainly the organized system of the audited unit Kanghua Agriculture through the inefficient increase of bank deposits and accounts receivable,fictitious sales revenue and other means.Sexual financial fraud,and its internal control system is also ineffective.In addition,the CPA did not maintain due professional attention to the abnormal financial data of Kanghua Agriculture,and the independence of the audit was insufficient.However,the accounting firm did not make a reasonable assessment of Kanghua's agricultural operation status when undertaking the business.Strict implementation of quality control procedures.At the same time,the unfair competition in the auditing industry and the lack of legal and regulatory constraints,and the low cost of violations are also a reason for the audit failure of Lixin Certified Public Accountants in this case.Through the study of this case,we can draw the following conclusions.First,the lack of diligence of CPAs is the direct cause of audit failure.Secondly,the strict quality control of Lixin Certified Public Accountants is the direct cause of audit failure;again,Kanghua Agriculture Financial fraud is the root cause of audit failures.Finally,flaws in audit industry supervision are the external causes of audit failure.In view of the reasons for the audit failure and the research conclusions,in order to improve the audit quality,we can take measures from the aspects of CPA,accounting firm and industry environment to prevent audit failure,including paying attention to the professional ethics education of auditors and strengthening the quality control of accounting firms.System construction,pay attention to the operation status of audited units,pay attention to audit technology innovation,standardize audit market competition,and increase penalties forviolations.Through the research on audit failure,this paper summarizes the problems existing in the specific audit process of CPAs and accounting firms and the financial fraud methods of the audited entities,analyzes the causes of audit failures from various aspects,and proposes corresponding measures to prevent audit failures.It will help accounting firms to improve audit quality and optimize the operating environment of China's audit market.In addition,it can improve the authenticity of financial information,so that investors can rely on these financial information to make correct investment decisions,and to a certain extent protect the interests of investors.