A Case Study On The Audit Failure Of Yabaite By Zhonghua Certified Public Accountants LLP

In 2019,the 2nd China International Import Expo was held in Shanghai.As a major initiative for China to open the market,more than 1000 companies along the Belt and Road participated in the exhibition in 2018.Taking the infrastructure construction as the main line is the core of the Belt and Road.With the development of globalization,more and more companies especially in the field of construction will expand overseas business.For enterprises,the globalization of business reflects competitive advantages.However,in view of the particularity of cross-border cooperation projects,some listed companies regard it as an opportunity for financial fraud.Financial fraud related to overseas projects often occurs,which is not only harmful to the normal operation of the whole capital market,but also brings direct or indirect losses to stakeholders.To some extent,it may result in bad impacts on the reputation of certified public accountants and then affect the whole audit industry.Therefore,it is necessary to study typical cases of financial fraud in the field of overseas projects,discuss the reasons of audit failure and give related suggestions in order to reduce the possibility of audit failure.This paper focuses on the audit failure of Yabaite by Zhonghua Certified Public Accountants LLP.It is based on the five factor theory of financial fraud crime model,the hypothesis of rational economic person and principal-agent theory.In addition,it mainly studies the definition,causes and related avoidance measures of audit failure.The characteristics of this paper are mainly reflected in the following three aspects: first,about the selection of case,this paper chooses Yabaite as the research object,which is a representative of cross-border financial fraud.Secondly,in terms of research methods,the case study method is selected for in-depth analysis.Finally,in terms of research content,CRIME theoretical model is used as the analysis framework because the theoretical analysis dimension is more comprehensive,including the analysis of reasons and the perspective of countermeasures.In this way,a more comprehensive and in-depth analysis of the research issues can be done.Through comprehensive consideration of all aspects,the definition of audit failure is based on the process theory.The professional ability of the auditors is analyzed through the data of the financial statements and the audit procedures.In addition,it analyses the aspects like the control of quality,the cost of violating the rules which relates to the amendment of Securities law in 2019 and so on.Taking all this into account,it analyzes the reasons of the audit failure from different perspectives.Lastly,for the sake of the prevention of audit failure,particularly the audit failure of financial fraud in overseas business,this paper analyzes the characteristics of overseas audit project in construction industry by the number and content of rules which are violated,makes statistics on the fraud ways of Listed Companies in the past 10 years.After that,related measures are put forward.The results are as follows: in order to prevent audit failure,certified public accountants should understand the common financial fraud means in the construction industry and grasp the key point of overseas project audit.Accounting firms can carry out joint auditing and establish quality oriented performance evaluation system.At the audit environment level,audit failure may be effectively curbed by the deep integration of Party construction and audit supervision and the optimization of the mechanism after the violation of laws and regulations.