A Case Study On Audit Failure Of Kanghua Agricultural Backdoor Listing

In recent years,with the rapid development of China's securities market,more and more enterprises try to improve the company's operating level or change their own plight by listing.Under the temptation of high returns after listing,some enterprises will try to break the law and violate the rules with luck in the process of listing.At the same time,some third-party auditing institutions are tempted by the interests of these enterprises,and lose industry self-discipline,shield or even "help" enterprises to fake,such as compiling false data and information,and having insider trading.The reasons for enterprise fraud are complex,and the way of fraud is hidden,which makes it difficult to distinguish.This kind of fraud is particularly easy to occur in agricultural companies.Therefore,it is of great significance in theory and practice to formulate reasonable measures to regulate financial fraud in asset restructuring.There are many ways of listing companies.Some companies choose backdoor listing,while others choose the way of initial listing.The case selected in this paper is that Kanghua Agriculture wants to borrow backdoor from Busen Share to achieve the purpose of listing.However,in the process of borrowing,a series of asset fiction happened,and Lixin Accounting Firm issued unqualified audit opinions to shield its financial fraud.However,no matter how skillful the forgery means are,the forgery is false and it is difficult to be untrue.Kanghua Agriculture was finally punished by the SFC,and its listing qualification was revoked.As a result,Lixin was punished by the SFC.Based on the concepts of backdoor listing and audit failure,this paper summarizes the relevant research literature at home and abroad,uses fraud triangle theory to analyze the whole process of Busen shares and Kanghua agricultural assets reorganization,and analyses the background conditions and means of financial fraud and financial fraud in the process of corporate assets reorganization.Then it analyses the reasons for the audit failure of Lixin Accounting Firm,and puts forward the countermeasures to avoid the false audit reports issued by Lixin Accounting Firm.The suggestions are mainly from two aspects: accounting firms and securities regulatory bodies.Through this study,we find that,firstly,in the process of asset reorganization of audit enterprises,we should start with the reasons for the failure of third-party auditing,and accordingly put forward relevant countermeasures to avoid audit risks as far as possible,so that enterprises and auditing units can operate well;secondly,accounting firms should improve the professional level of auditors,strengthen ideological and moral education,and eliminate violations of laws and regulations.Finally,the supervisory and supervisory bodies other than enterprises and accounting firms should play their own roles,not in vain.They should play the role of economic market policemen and maintain caution to ensure the stable and sustainable development of the market economy.