A Case Study On The Audit Failure Of Xinlv Company Limited

Since its establishment in 2013,the NEEQ has developed at an amazing speed,which has allowed multi-level capital market in China to continue to improve.However,the drawback of the NEEQ has shown up gradually.The NEEQ has low access threshold,low information transparency and poor regulatory environment,which have increased the risk of audit business of the new third board.As a result,it is necessary to study the failure case of the NEEQ audit.The research idea of this thesis is as follows: this paper reviews the literature from three aspects: the audit identification,the audit of the new third board and the Countermeasures for the audit failure.Based on the rational economic man theory,audit conflict theory and modern risk-oriented theory and with the methods of case analysis,field investigation and literature collection,this paper aims at the fact that both Beijing Xinghua and ZTE Guanghua failed to audit Xinlv shares and it is found that new green shares engaged in financial fraud by falsely increasing its main business income,falsely increasing its fixed assets,falsely increasing its bank deposits and concealing related party transactions from 2013 to 2015.After analyzing the specific process of CPA audit,it is found that the two firms have common problems in the audit process,such as inaccurate risk identification of key financial indicators,insufficient understanding of internal control defects,insufficient understanding of industry and operation risks,insufficient understanding of gambling agreement risks.After in-depth research,we found the reasons lay on the lack of professional ability of certified public accountants,the non-standard implementation of key audit procedures of the new third board,the lack of industry experience of accounting firms,the haste of undertaking business,the low requirements for information disclosure at the regulatory level,the light punishment of the CSRC,the long punishment cycle of the CSRC.Finally,the thesis puts forward relevant suggestions corresponding to the three subjects,that is,certified public accountants should improve their professional ability and strengthen the implementation of key audit procedures of the new third board,accounting firms should clearly develop advantageous businesses and strengthen the quality control of undertaking businesses,and external supervision should refine information disclosure requirements,strengthen punishment and improve the timeliness of punishment.