The Reasons For The Repeated Punishment Of Accounting Firms And Their Improvement Measures

In recent years,social audit has occupied an important position in the market economy.Different from government audit and internal audit,the market needs the intervention of a third party like accounting firm to provide fair and just authentication services for listed companies.But the accounting firm itself is a profit-making company,so the accounting firm must also accept the supervision and management of the government and the public.From the entry of the "big four" into the domestic market,to the merger and expansion of the domestic accounting firms,the domestic accounting firms represented by Ruihua accounting firm have developed rapidly in recent years,far surpassing the "big four" in terms of auditing clients.However,the dual nature of accounting firms makes them always latent risk and uncertainty.In 2016,China securities regulatory commission carried out the first special law enforcement action against auditing and evaluation institutions.As a result of the strengthening of supervision,many firms were frequently subject to administrative penalties,leading to clients' dismissal,reputation damage and departure of certified public accountants.On this basis,the research questions of this paper are based on the occurrence of violations of Ruihua law firm,what is the reason behind the repeated punishment,and how it is related to the regulatory environment of the audit market.This paper USES the method of case study to first analyze the overall operation of Ruihua,and statistics the number of clients,types of audit reports and audit income before and after Ruihua was subject to administrative penalties from 2013 to 2017,so as to have a general understanding of the impact of administrative penalties on Ruihua office in recent years.As for the reasons of repeated punishment,this paper studies the reasons of repeated punishment of accounting firms from the perspectives of the demand side and the supply side of the audit market and the regulatory environment,and puts forward Suggestions based on this.Through analysis,the following conclusions are drawn.(1)after the office is subject to administrative punishment,the number of customers,audit income and audit report show fluctuations.(2)the low quality preference of audit demand side is the objective reason for Ruihua to be punished for many times.(3)the low quality catering of audit suppliers is the subjective reason for Ruihua to be punished for many times.(4)the adverse selection in the audit market makes it inevitable for firms to be punished for many times without obvious improvement.Innovation and the significance of this article is:first,the difference in a single audit failure case to analyze the causes of audit failure,existing from the auditees financial fraud analysis research and extension to the certified public accountants audit failure,but for many accounting firm,and a single case to explore the reason of audit failure many times.Secondly,this paper sorts out Ruihua accounting firm which has been punished by regulators for many times recently,and makes statistical analysis of common influencing factors in many cases.Through the research of this paper,it enriches the research on the administrative punishment of accounting firms and their certified public accountants by China securities regulatory commission.It provides reference for Chinese accounting firms to strengthen their own construction and the supervision of CPA industry.