Case Study On Audit Failure Of SME Listed Companies

The SME board market has become an indispensable and important part of China's capital market.According to the information disclosure of the Shenzhen Stock Exchange,As of May 22,2020,there were 957 listed companies on the SME board,with a total share capital of 9461.81 billion shares and a total market value of 102872.84 billion yuan.Due to various factors,in recent years,the failure of small and medium-sized board audits have not only caused significant losses to investors,but also damaged the reputation of certified public accountants and accounting firms,and even questioned the credibility of the certified public accountant industry.It is conducive to the development of the small and medium-sized board market.Therefore,it is particularly important to explore the problems and causes of audit failures of listed companies on the small and medium board,and to put forward prevention and control suggestions.Because of its multiple listing labels,such as backdoor listings,high-tech companies,and overseas transactions,Yabaite has a huge amount of fraud,and is the first listed company in China that has been shocked by the Ministry of Foreign Affairs,so Yabaite is a typical audit failure case in the SME board market.First of all,this paper analyzes the research related to audit failure at domestic and abroad,and uses it as the relevant basis for this study.Second,it summarizes the contents of the 2013-2019 punishment decision of the CSRC,and analyzes accounting firms and CPAs for auditing SME boards,and analyzes the status of audit failures of accounting firms and certified public accountants.The occurrence of audit failures of SME listed companies stems from a variety of factors.The problem of audit failures has become more serious and the impact has become more widespread.Therefore,combining the characteristics of small and medium-sized listed companies,and using the theory of modern risk-oriented audit and principal-agent,from certified public accountants and accounting firms,the SME listed companies governance and regulatory supervision,this paper from three levels to analyze the reasons for the failure of the audit: the weak quality control in accounting firms,CPAs do not diligently and conscientiously maintain due professional doubt,fail to identify and evaluate risks,and intentionally reduce audit procedures for dealing with audit risks are the direct causes of the audit failure;SME listed companies have ahigh risk of continuing operations,and ineffective internal control,and incomplete relevant laws and regulations,weak supervision,lighter penalties are the indirect causes of audit failure.Then this paper uses the case study method,combines with financial fraud methods of Yabaite's falsified overseas construction projects,fabricated domestic and foreign building materials trade to analyze the reasons that lead to the failure of the audit: The direct reasons are that the certified public accountants lack sufficient professional skepticism,inadequate audit risk assessment,inadequate implementation of audit procedures to deal with risks,and inadequate quality control of accounting firms;the indirect reasons are that Yabaite's main business is singular and eager to raise funds,which results in large operating risks,imperfect internal control environment and supervision system,imperfect small and medium board supervision system,and light punishment.Finally,in view of the above reasons,this article proposes countermeasures to prevent and control audit failures of SME board listed companies: When auditing,CPAs should always maintain due attention,conduct reasonable professional skepticism,attach importance to risk identification and evaluation,particularly familiar with the internal and external environmental conditions of the audited entity,then implement full and proper audit procedures to deal with risks,in addition,accounting firms should strengthen the construction of quality control,strictly control audit quality;SME board listed companies should broaden their financing channels and improve their internal control.In terms of external supervision,regulators need to improve laws and regulations for SME boards,improve industry supervision and strengthen penalties.