Research On The Misconduct Of Audit Procedures Of LX Accounting Firm Based On The McKinsey 7S Model

As an independent third-party organization,accounting firms play various social roles,including the supervisor of social economic activities,the evaluator of enterprise management behavior,the witness of enterprise financial status and the defender of investors’ rights and interests.But in recent years,the China Securities Regulatory Commission has publicly issued warning letters to a number of accounting firms,accusing them of improper audit procedures and defects.It can be seen that accounting firms have failed to be the gatekeeper,and the supervision function independent from enterprises has not been effectively played.Therefore,it is urgent to pay attention to and improve the implementation of audit procedures.As the leading domestic accounting firm in the industry,LX CPA firm’s performance in all aspects should be the industry benchmark.In recent years,however,its name has frequently appeared in the CSRC’s audit procedures in the penalty notice.As a tool to judge the internal situation of an organization,McKinsey 7S model is suitable to be used here to analyze the internal problems of LX accounting firm that lead to frequent errors and omissions in the implementation of audit procedures.This paper aims to provide reference for accounting firms with similar organizational conditions,and reduce the occurrence of improper auditing procedures.By reviewing relevant literature,this paper finds that the problem of improper auditing procedures does exist,and determines McKinsey 7S model as the problem analysis tool for this paper.Then,it sorted out the audit procedures related warning letters issued by China Securities Regulatory Commission to LX in recent two years,and selected DLWH,FNDF,KHGF,XXZY,MASYH,HZJD six projects.It concludes that the specific performance of audit procedure malpractice in LX firm includes that the employees do not fully understand the situation of the audited company,the implementation of audit procedures related system is not perfect,the implementation style of audit procedures of the audited company is arbitrary,the skills of preparing audit working papers are not in place,and the standards of maintaining professional attention are not met.Next,seven factors in McKinsey 7S model are used to make a detailed analysis of the reasons leading to the malpractice of audit procedures in LX,and the reasons are as follows: Lack of staff resources and professional level,deficiencies in project and process supervision system,audit technology and the forefront of the industry still exist gaps,the internal governance structure of the firm needs to be improved,the work style is not rigorous and insufficient review,the strategic goal is too focused on the number of projects.Finally,according to the analysis of the causes of the problems to the accounting firm on how to avoid the improper audit process countermeasures and suggestions.