Study On The Andit Failure Of KDX Company By RH Accounting Firm

In recent years,with the rapid and vigorous development of China’s capital market,the public has become more and more aware of the importance of auditing,and its understanding of high audit quality has become clearer,and the demand of listed companies for auditing has also been increasing.With the expansion of the scale,the company’s business types are increasingly rich,the emergence of an endless stream of financial fraud means also refresh the public’s awareness.With the increasing difficulty and challenge of audit,the possibility of audit failure increases.However,the consequences of audit failure are often negative.First,it will cause economic losses to investors;second,it will damage the image and reputation of accounting firms and CPA,which is not conducive to the development of their business.It will even cause the public to seriously question its professional ethics and lead to the deterioration of the relationship between the audit industry and the public.Therefore,in order to promote the positive development of audit industry,it is indispensable to analyze the causes of audit failure and explore reasonable and effective preventive measures.Among the many cases of audit failure in 2019,this paper takes the audit failure case of RH accounting firm on KDX company as the research object for the following reasons: first,the study of audit failure case of KDX is conducive to preventing the recurrence of similar audit failure cases.Second,in recent years,the comprehensive ranking of RH accounting firm in the industry has always been at the top,but it has been punished by the CSRC for many times,which shows that the implementation of quality control is not in place,and the audit quality needs to be further improved.Based on the above,it is necessary to study the audit failure cases of RH accounting firm on KDX company.This will help improve the audit quality of RH accounting firm and restore its industry image and credibility.First of all,this paper summarizes the literatures about audit failure by experts and scholars at home and abroad.And from the macro point of view of the analysis,summarized the reasons for the possibility of audit failure of listed companies.Secondly,this paper USES case study method,literature analysis method and comparative analysis method to systematically analyze the financial fraud means of KDX company and the impact and consequences of audit failure.Using the theories of information asymmetry,audit conflict,principal-agent and so on,and analyzing the reasons for RH accounting firm’s audit failure of KDX company from the aspects of audit subject,audit object and audit environment,for example,RH accounting firm neglected to identify audit risks,failed to implement effective analysis procedures,and CPA didn’t maintain professional skepticism.The internal control of the listed company is invalid and the information disclosure system is not implemented effectively;Supervision and punishment of relevant institutions are insufficient.In view of the causes of audit failure,reasonable and effective preventive countermeasures are put forward,such as strengthening the construction of CPA professional ethics,comprehensively identifying and evaluating risks,focusing on high-risk areas,enhancing the independence of accounting firms,and introducing big data technology and artificial intelligence into audit work.Adjust the company’s equity structure and improve the information disclosure system of listed companies;We will curb vicious competition,improve the competitive environment of audit market,and increase the intensity of inspection and punishment.