Case Study On The Lack Of Independence Of CPA In TT Firm

Audit independence has a very strong influence and dominates the entire modern conceptual system of auditing.Independence is the basic condition to ensure that the CPA profession can maintain its survival and long-term development,and it is also the keynote and core of auditing,a prerequisite for audit opinions to remain objective,true and fair.Without independence,there is no audit authority.However,in recent years,financial fraud cases have occurred repeatedly,and a series of audit failures such as Kangde Xin,Fu Ren Pharmaceutical,Blue Mountain Technology and CITIC Guoan audit cases have made the public highly suspicious of CPA audit independence.In order to maintain the orderly development of the market economy and the legitimate interests of all parties,as well as to promote the healthy development of the CPA profession itself,attaching importance to and improving the independence of CPA audits has become a research topic of great concern in the capital market.This paper takes the form of a case study of the CPA audit issues of TT CPA firm to explore the lack of independence of the CPA of the firm.Firstly,by understanding the main text of the case,it is clarified that the CPA’s audit independence deficiency in the practice process: TT CPA promised to pay intermediary fees;signed audit engagement letter to issue audit report with specific opinion;auditors did not maintain control over the correspondence procedure;irregularly modified the content of audit draft after issuing audit report;and audit procedures were not fully implemented in the audit.Subsequently,the reasons for the above-mentioned audit independence deficiencies were analyzed.Once penalized for the CPA’s signed audit report,the penalty is the responsibility of TT Firm to compensate for the self-interest brought about by the penalty;the self-interest and external pressure brought about by the supplemental agreement and contingent fee;TT Firm’s experience in undertaking securities services is zero and its competence is not sufficient to cope with the impact of external pressure;audit fees account for an excessively high proportion of TT Firm’s annual revenue and its dependence on ~*ST The high dependence on ~*STXin Yi is influenced by external pressure and self-interest;TT Firm wants to increase the revenue of CPA firm through disguised advertising strategy resulting in self-interest influence.Finally,there are suggestions for CPAs to improve audit independence;CPAs should be aware of audit risk;CPA firms should implement strict quality review;CPA firms should purchase professional liability insurance;CPA firms should expand their client base;and the whole firm should establish the concept of quality as the core.The above case study provides help to improve CPA audit independence and thus audit quality.