Study On Audit Failure Of Chinese CPA

In the last few years, serious audit failures have appeared very often around the world. While audit failure reduces capital market efficiency and affects seriously audited company's development, audit firm and Certificate Public Accountant (CPA) encounter unprecedented credit crisis. By studying the reasons which cause audit failure and strategy which is used to avoid audit failure, the thesis is expected to find a way to decrease frequency of audit failure, to improve capital market, and to develop CPA industry and audited company. The even more important point for this thesis is that research results are expected to benefit Chinese accounting practice against audit failure.In the first part, the thesis mainly summarized literatures which domestic and foreign scholars had studied on audit failure. The second part, the thesis explained definition about audit failure and its influence. Based on the definition and judgmental criteria for audit failure, the effect of audit failure on securities market, investors, CPA industry, accounting firm and individual CPA has been analyzed and portrayed. In the third part, current situation of audit failure in China and related reasons have been explained. Within these reasons, three factors including social environment, auditing subject and auditing object are involved. Just because of analysis of the first three parts, the forth part of the thesis proposed some strategies to avoid audit failure. The strategies included many aspects such as optimizing economic environment, enhancing quality of audit subject and object. As a conclusion, the last part of the thesis indicated shortcomings of the study and further research problems.This thesis defined audit failure as activity that individual CPA did not discover material fraud existed in the audited financial statements because he or she did not comply with the requirement of independent audit standards. According to the definition, by applying game theory, the thesis established game model which was used to study reasons of audit failure and strategy against audit failure. Within the game model, auditing subject such as accounting firm and individual CPA, auditing object such as shareholders of audited company, manager, supervision and management institutes including judicial entity, China Securities Regulatory Commission (CSRC), and relationship among them were all concerned. Through the game process, many analysis results were created. Among these results, slight penalty for responsible individuals by judicial institute, natural shortcoming of capital market...