Case Study On The Failure Of Machine Tool Audit In Kunming

With the rapid development of economy and science and technology,the demand for auditing in capital market is increasing day by day,and the role of CPAs regarded as "economic police" is becoming more and more important.However,the successive cases of audit failure bring huge economic losses to investors,and at the same time make CPAs and firms fall into the crisis of lack of credibility.In recent years,the number of accounting firms punished in China has been on the rise.This paper counts 67 announcements of administrative penalties issued by CSRC from 2001 to 2018.Almost all audit failures are accompanied by the fact of financial fraud of enterprises,which makes the public question whether auditors have fulfilled their corresponding audit responsibilities in the process of carrying out their business.? Therefore,it is of great practical significance to explore the specific problems of auditors in the audit business and the countermeasures to prevent audit failure.This paper combines case study method with statistical analysis method,takes the principal-agent theory as the audit theoretical basis,takes the audit failure case of Kunming Machine Tool.as an example,deeply understands the process of audit failure of Kunming Machine Tool.and fails to implement appropriate fraud risk response measures,effective drawing procedure and correspondence to Accounting Firm.Certificate maintenance control led to the failure of audit of Kunming Machine Tool.Through the deep analysis of the reasons for the audit failure of Kunming Machine Tool.,the paper gives the corresponding preventive measures.Certified public accountants should abide by professional ethics and improve their professional competence.Accounting firms should strengthen quality control and risk awareness.The government should strengthen supervision and punishment of the industry of Certified Public Accountants so as to prevent the recurrence of audit failure.