The Study On The Audit Failure Of Kaidi Ecological And Environmental Technology Co.,Ltd.’s Financial Statements By ZZ Accounting Firm

By the end of 2020,there were about 9800 state-owned accounting firms and110365 certified public accountants in China.In 2020,audit failure accounted for 23% of information disclosure cases of listed companies,involving more than 130 certificated public accountants,and 37 accounting firms were punished by the China Securities Regulatory Commission.Audit failure not only brings huge economic losses to investors,but also makes the public lack confidence in accounting firms and auditors,which has an adverse impact on the smooth operation of the securities market.Therefore,it is urgent to effectively avoid the audit failure of certified public accountants.Using the methods of literature research and case study,based on the relevant research results of domestic and foreign scholars on the financial report audit failure,this paper takes ZZ accounting firm’s financial report audit failure of Kaidi Ecological And Environmental Technology Co.,Ltd.as the main research object.By expounding the concepts of financial statement audit and audit failure,combined with modern risk oriented audit and other theories,this paper points out that the performance of ZZ accounting firm on the financial statement audit failure of Kaidi Ecological And Environmental Technology Co.,Ltd.includes: the implementation of risk assessment is not in place;Failing to fully understand and test the effectiveness of internal control of the auditee;Failure to implement adequate and appropriate audit procedures;Insufficient consideration is given to the evidence contradictory to the capitalization of borrowing costs.According to the specific performance analysis,the causes of financial report audit failure include: auditors’ lack of risk awareness and professional skepticism,auditors’ weak professional competence,continuous audit failed to maintain its due independence,and the firm did not strictly implement the audit quality review system.In view of the above causes of audit failure,this paper puts forward the following countermeasures and suggestions: First,certified public accountants should maintain due professional suspicion,including fully understanding the auditee and its environment,and strengthening risk awareness;Second,improve the professional competence of certified public accountants,including designing and implementing appropriate audit procedures,attracting auditors with strong professional competence and building a more professional audit team;Third,strengthen the independence construction of accounting firms,including strictly abiding by audit standards,paying attention to the cultivation of auditors’ independence consciousness,improving the rotation system and enforcing it;Fourth,strengthen the construction of audit quality control,including integrating the quality first firm culture into daily management,strictly constructing and implementing the accountability mechanism,and improving the firm quality review mechanism.This paper summarizes the performance of the financial report audit failure of ZZ accounting firm,analyzes the main causes of audit failure,and puts forward effective improvement suggestions to avoid the financial report audit failure,which is conducive to enhance the professional ability of certified public accountants,boost the audit efficiency and effect,enable the report users to obtain more authentic and reliable financial information,and further improve the credibility of Certified Public Accountants in the public,Optimize the development environment of the audit industry.