Research On Audit Failure Causes And Countermeasures Of Accounting Firms

With the rapid development of China’s economy and the gradual improvement of the capital market,auditing plays an increasingly important role in the market supervision system.As an independent third party,audit provides reasonable guarantee for the financial statements of listed companies and issues corresponding audit reports,which is one of the important means to maintain the healthy and orderly development of the capital market.However,due to the influence of a variety of complex factors,there have been many audit failures in the market.This not only infringes the interests of investors,but also damages the rules and order of the economic market.For audit subjects,the occurrence of audit failures causes market participants and the public to question the professional competence and even audit function of certified public accountants,and also damages the reputation of the entire audit industry,which has an adverse impact on the future development of firms.The frequent occurrence of audit failure cases has aroused the attention of both inside and outside the industry.Therefore,the reason analysis of audit failure and its circumvention methods have become a hot issue in current research.This paper mainly uses the literature research method in the introduction,related concepts and theoretical basis.The literature review part of the introduction summarizes the research achievements of domestic and foreign scholars in the field of audit failure.Based on the theory of principal-agent theory,information asymmetry theory and modern risk-oriented audit theory,this paper defines the concepts of audit failure and audit risk.Then,taking Zhongzhu River and Rongtai as the research object,this paper analyzes the causes and countermeasures of audit failure of accounting firms by using case analysis method.Through the analysis,it is found that there are three reasons for the failure of the audit of Zheng Zhujiang against Rongtai Guangdong: certified public accountants,accounting firms and external environment.The reasons for CPA include the implementation of risk assessment procedures is not in place,the implementation of further audit procedures,the implementation of additional audit procedures,internal control testing is mere formality and there are major defects in verification procedures;The reasons of accounting firms include the lack of audit independence,the formality of audit quality management procedures and the imperfection of audit quality management mechanism;The reasons of external environment mainly include insufficient punishment for audit violations,vicious competition in the audit industry and loose audit supervision environment.Through the analysis of the causes of audit failure,this paper puts forward the countermeasures of audit failure prevention from three aspects: certified public accountants,accounting firms and external environment.As for certified public accountants,they should strictly implement audit risk assessment procedures,strictly implement audit risk coping procedures,maintain reasonable professional skepticism and enhance professional competence.Accounting firms,improve the audit rotation system,improve the audit quality management mechanism,improve the audit quality management system;In terms of external environment,we should strengthen the punishment of audit violations,standardize competition in the audit industry and strengthen the construction of audit supervision environment.This paper studies the audit failure of accounting firms through case analysis,hoping to help improve the audit quality of certified public accountants and provide some reference and inspiration for other accounting firms.