A Case Study On The Audit Failure Of Certified Public Accountants

China's market economy started late,but in recent years,it has continued to develop in the discovery and resolution of problems,and the establishment of the capital market has also achieved initial results.To further improve the economic system,a sound monitoring mechanism is essential,and the audit industry As a part of the supervision mechanism,it plays a vital role in it,and thus has a broad space for development.However,in recent years,there have been frequent financial fraud incidents of listed companies,and the audit subjects that should have played a role of supervision and prevention have also been involved.The fact that audit failures are unavoidable has also been punished by the CSRC.After the failure of the audit,a series of negative effects will follow.The impact will be small,not only causing huge economic losses to investors,but also causing both reputation and economic losses to accounting firms and their certified public accountants.To the greater,it will disrupt the normal order of the capital market,make investors,creditors and other stakeholders question the credibility of the audit industry,and even shake the foundation of integrity of the entire society.Because the negative impact of audit failure is not only wide-ranging,but also extremely serious,it has caused widespread concern in various countries around the world,and discussions on topics related to audit failure have also been endless.Therefore,how to evade and respond to audit failure has become an urgent problem that needs to be solved at present,and it is particularly necessary to study the problem of audit failure of certified public accountants.This article first sorts out the research literature on the concept,causes and countermeasures of audit failure by domestic and foreign scholars.Existing studies have shown that the lack of strength in the three aspects of the firm,the certified public accountant,the audited entity,and legal supervision is the main reason for the failure of the audit.Secondly,in order to analyze the causes of audit failures in a more comprehensive and in-depth manner,propose measures to prevent and respond to audit failures,and define the concept of audit failures.This article adopts theviewpoint of the audit process failure theory.Based on the theory of individual behavior,principal-agent theory,risk-oriented auditing theory and information asymmetry theory,the theoretical analysis of audit failure is carried out.The definition of the concept of audit failure and the related theoretical analysis are expanded to provide theoretical support for the specific problems and solutions in the case analysis later,and also help to enrich the theoretical analysis of China's CPA audit failure research.This article also summarizes 47 typical audit failure cases punished by the CSRC from 2008 to 2019,summarizes and analyzes the common factors that cause audit failures and the characteristics of the current status of audit failures.Based on this,Lixin's audit of Jinya Technology Failure is the object of case study,which increases the practical significance of the article research.Furthermore,reviewing the beginning and end of Lixin's failed audit of Jinya Technology,and sorting out the fraud of Jinya Technology,the problems existing in Lixin's audit process,and the consequences of Lixin's audit failure,according to the penalty decision of the Securities and Futures Commission.The analysis of Jinya Technology's audit failure cases,combined with the audit failure phenomenon in the domestic market,verified that the lack of strength of the firm and the CPA,the audited entity,and the legal supervision were the main reasons leading to the failure of the audit.The specific reasons are: the lack of audit independence at the subject level of the audit,the lack of professional and technical capabilities;the audit risk assessment of the firm is not in place,the audit procedures are not implemented properly,and the quality control of the audit report is ineffective.At the audit business object level,the disclosure of financial statements of the audited entity was distorted and the corporate governance structure was imperfect.At the level of practice environment and external supervision,competition in the audit market is not standardized,the relevant legal binding force is low,and the government supervision and management system is incomplete.Finally,based on the analysis of the reasons for the failure of audits,corresponding suggestions were made to evade audit failures from the four levels of certified public accountants,accounting firms,audited entities,the practice environment,and legal supervision.That is,the CPA should adhere to the principle of independence and improve Professional competence;accounting firms should carefully evaluate audit risks,strictly implement audit procedures,and strengthen the control of audit report quality;the audited units need to strengthen internal audit construction and improve the company's internal governance mechanism;the practice environment and external regulatory aspects of audit work Relevant government agencies and industry organizations need to vigorously regulate the audit market competition order,increase the cost of violations in the audit industry,and strengthen external supervision mechanisms.Although this article summarizes domestic and foreign scholars' research on audit failures and analyzes the cases in conjunction with related theories,because the relevant reference materials are all from the Internet public information,and relevant internal materials have not been obtained,coupled with limited personal capabilities,making The analysis of this case is not thorough and comprehensive,and the countermeasures and suggestions put forward are not perfect.In addition,the limitation of this article is that it only analyzes a single specific case,and lacks empirical quantitative research.Therefore,future research on audit failures can be combined with multiple cases to analyze the similarities and differences between the causes of audit failures,try empirical studies,and explore the causes of audit failures in a more comprehensive and in-depth manner,with a view to proposing more,better and feasible Evasive measures and countermeasures for audit failures fundamentally improve audit quality and reduce the possibility of audit failures.