Research On The Definition Of CPA’s Audit Responsibility In Audit Failure

With the rapid development of China ’s capital market,financial reporting fraud cases of listed companies occur frequently,which not only has a bad impact on the capital market,but also shows that China ’s audit quality still needs to be improved.In this context,both theoretical and practical circles are calling for strict supervision of audit institutions,increasing penalties,and compacting the responsibilities of intermediaries to protect the legitimate rights and interests of investors in capital markets.Article 56 of the new ’ Securities Law ’,which was formally implemented on March 1,2020,has added provisions on civil liability of accounting firms and their staff if they make false statements in their work;on October 18,2021,the Ministry of Finance issued the " Revised Draft of the Law of the People ’s Republic of China on Certified Public Accountants(Draft for Comments)," which is intended to be linked to the penalties of the Securities Law and increase the penalties for the quality of practice.In the context of strict supervision,the penalties faced by certified public accountants have increased.The accounting firms ’ joint liability for compensation has caused a large-scale controversy in the industry,which has been concerned by the community,and the focus of controversy is mainly focused on the definition of audit responsibility.In the face of stricter regulatory tendencies,in order to limit the CPA audit responsibility within a reasonable range,to promote the healthy development of the CPA industry,to explore a reasonable definition of CPA audit responsibility is particularly important.After combing the relevant literature at home and abroad,this paper discusses the theory and method of defining audit responsibility based on the theory of audit expectation gap,’ deep pocket ’ theory and tort theory,and constructs the matrix diagram of defining audit legal responsibility,so as to provide suggestions for the judicial practice of defining audit responsibility.In the process of further analysis and research,by observing the trend of regulator’ s definition of audit responsibility in recent years,we can grasp the regulatory trend and the regulatory effect they want to achieve,and identify the problems in the definition of audit responsibility.Based on the above theoretical and practical basis,this paper further takes the audit failure case of Daxin Certified Public Accountants audit of Wuyang Construction as an example,analyzes the controversial points of CPA’s responsibility in audit failure,analyzes the rationality of its audit procedures,and finds that the definition of CPA’s audit responsibility in China still has some problems,such as unclear connotation and standard of diligence and due diligence,unclear boundary of CPA’s responsibilities,etc.,and puts forward the following suggestions : For CPA’s,accounting firms should establish and improve the audit quality control system,and CPA’s should strengthen the awareness of legal liability risk prevention;for the regulatory level,we should clarify the connotation and standard of diligence and due diligence as soon as possible through law enforcement and judicial practice,clarify the boundary of CPA’s duties,and construct the subdivision standard of fault identification;for the contradictions in the laws and regulations,we should coordinate the revision of relevant laws,and build both administrative and civil supervision system.In this paper,the case study method is used to study the reasonable definition of the audit responsibility of certified public accountants,which enriches the method of reasonably defining and scientifically standardizing the audit responsibility of certified public accountants in China to a certain extent.It helps certified public accountants to reduce audit risks and improve audit quality,avoid or reduce unnecessary legal proceedings,and promote the sound operation of China ’s certified public accountants industry.The research on the relevant factors of the definition of the audit responsibility of certified public accountants can also provide a basis for the judicial organs to reasonably define the audit responsibility of certified public accountants.