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Research On The Audit Failure Case Of Zhonghua Auditing Jiangsu Yabaite Technology Co.,Ltd

Posted on:2021-03-28Degree:MasterType:Thesis
Country:ChinaCandidate:Y YuFull Text:PDF
GTID:2439330620471441Subject:Accounting
Abstract/Summary:PDF Full Text Request
Since the participants of capital markets make decisions according to information,whether the information is disclosed in a high quality affects the market running.From among,financial information is the most basic,while mandatory disclosure financial information(like financial statements)is particularly significant.Meanwhile,CPA auditing is crucial in checking the quality of financial information of capital markets,therefore the audit quality of the CPA industry is always broadly concerned.However,in recent years audit failures have occurred repeatedly,which has brought accounting firms and CPAs punishment,diminished public trust of accounting firms,and caused losses to stakeholders.Meanwhile,CSRC also attaches great importance to both governance and rectification of audit failures.On November 15,2019,CSRC issued “the basic practice information of accounting firms with qualification for securities business on capital markets” for related parties to comprehend the abilities of accounting firms providing high-quality audit services.CSRC also mentioned the plan of reinforcing the supervision of accounting firms.Besides,CSRC is positively exploring the establishment of the accounting firms' information disclosure system,aiming to adding the transparency of the accounting firm industry.On November 20,2019,Zhonghua accounting firm was ordered publicly by CSRC to rectify and suspend accepting new securities businesses,because Zhonghua had had two audit failures successively in one year.Therefore the process and causes of its audit failure are worth exploring.Thus this article takes the audit failure case of Zhonghua auditing Yabaite's 2015 financial statements as an example,which was imposed administrative punishment by CSRC on May 24,2019.After introducing the general situation of Zhonghua accounting firm and Yabaite,this article analyzes the main causes of its audit failure and gives suggestions from three levels which are CPA,accounting firm and industry supervision,hoping to improve the audit quality and prevent audit failures,safeguard the rights and interests of investors and ensure the orderly development of the audit industry when similar problems occur.This article combines literature analysis and case analysis as research methods.On the basis of organizing the relevant research literature of domestic and foreign scholars on the concept,causes,and prevention suggestions of audit failure,in combination with the punishment announcement of the CSRC,it first summarizes the following problems in the audit process of Zhonghua accounting firm: failing to find the false overseas project,the false export trade of building materials,false cash returns of the overseas project and the export trade and the false domestic trade of building materials and issuing an auditing report including false record.Then,through analysis,this paper comes to the following causes of audit failure.First,at CPA level,the project team members of Zhonghua accounting firm do not have a proper understanding of the adequacy of audit evidence,do not correctly understand the relationship between misstatement and audit procedures,lack sensitivity to abnormal situations and professional skepticism,do not reasonably judge the importance and affect the independence in order to retain the new client.Second,at the level of Zhonghua accounting firm,there are three points.Number one is that the chief partner lacks the consciousness of “quality first”,as reflected in both accepting and executing part of auditing.This paper selects a new angle “the chief partner of the accounting firm” to analyze the reason behind the audit failure and to raise suggestions,because besides the specialty of this case,what is taken into consideration is that the chief partner of an accounting firm has ultimate responsibility for the whole quality management system and guides the culture of the firm,which is essential to the quality of services.The other two reasons of this level are that the quality review system is not effectively implemented and the training of auditors is not in place.At the third level,the regulation of the industry is mainly lack of supervision of the chief partner,sufficiency and timeliness.Finally,this paper puts forward corresponding prevention suggestions from the above three levels to reduce or avoid audit failures,including how to manage the chief partner both inside the firm and from the perspective of industry supervision.It is hoped that Zhonghua can improve its quality management,and providing provides available thought and method to other peers facing similar situations.Meanwhile,audit failures can be avoided and prevented,and then the audit quality of the whole industry can be raised.
Keywords/Search Tags:Audit Quality, Audit Failure, Zhonghua Accounting Firm, Yabaite
PDF Full Text Request
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