Research On The Failure Of Auditing Fraud Of Financial Reports In China's Capital Market

Backdoor listing is simple and convenient,time saving and having a high probability of success,and has gain many favored listed companies.The success of backdoor listing can help to raised financing quickly,improve the overall management of the funds,enhanced profitability and raise the company's wider profile.Lured by the huge economic interests,a series of domestic and foreign famous business fraud and audit failure cases occurred.Bringing huge losses to investors but also harms the proper allocation of resources and the healthy development of Capital market.It's important to analysis the reasons for the failure of the backdoor listing audit,find the measures to prevent the failure of the backdoor listing audit.Firstly this paper analyzes theory about Financial Reporting Fraud and auditing,four motivation theories of financial fraud,theories of audit demand,summarize the forms of financial fraud and audit failures.Secondly,expound characteristics of financial reporting fraud in China Capital Markets.Thirdly,review the case of Backdoor Listing audit failure of Zhejiang Jiuhao Group,analyse the causes of backdoor listing audit failure from Jiuhao Group,the CPA and the external supervision level.Business model of Jiuhao is unique,management lack of Legal awareness and trustworthiness,the CPA's Quality control system is not strict and lack of professional suspicion and professional caution.Relevant laws are not perfect,the industry lacks supervision and punishment is low.Finally provides relevant suggestions.Accounting firms should improve their internal control systems including business process,supervised rule,personnel control,investment management,financial regulations and so on.Strengthen enterprise risk assessment and management,define risk control responsibilities,standardize financial management;CPA should keep professional suspicion and professional caution,maintain proper moral quality,maintain good professional images;Accounting Firms should make an investigation of actual situations of customer and choose customers carefully.Once the violation is discovered,they should adjust the auditing program.After accepted authorization,notice something abnormal of financial target.The government will improve relevant laws and regulations in the auditing industry,raise the maximum fine as a deterrent for future violations of the law,strengthen the CPA profession regulation role by establishing new laws,standardize the market order and do a good job in industry warning education.