Research Into The Auditing Responsibilities Of Cpa In China In The Case Of Kelon Electronics

As an important component of supervisory system of economy in China, CPA auditing has played a role to the order and healthy development of the market economy.There happened financial scandals frequently in eastern countries in recently years.for example,Enron failure led to the bankruptcy of Andersen, making Five Big to be the current Four Big. CPAs and accounting firms are more and more involved into various lawsuit cases in China,such as Yin Guang Xia Event made Zhong Tian Qin bankruptcy.People focus their attention on auditing responsibility of CPAs and accounting firms.In the spring of 2006, the case of Kelon Electrical Holdings Company hit another turbulence in financial community, while its auditing institution, Deloitte Touche Tohmatsu Certified Public Accountants Ltd. neglecting Kelon's illicit cash flow up to 1 billion Yuan, was considered to be lack of due professional caution in its auditing of Kelon's annual financial statement from 2002 to 2004, and its audit process did not comply with the relevant independent auditing standard. By irresponsibly issuing false auditing statements, Deloitte Touche Tohmatsu misguided the investors, which caused an enormous loss to them , should bear joint and several liabilities. This case again lead people to pay high attention to the CPA's auditing responsibilities.China entered WTO on Dec 11,2001.Chinese related industries would gradually open to world accordingly,and the process of internationalization would be accelerated.For the accommodation of this trend ,China came on new accounting principle and auditing principle in 2006,and would push in public companies and accounting firms separately in Jan.1,2007.China accounting principle and auditing principle are inclined to internationalization gradually,in this circumstance,it would be quite meaningful on how to judge logically and divide scenically CPAs auditing responsibilities which can safeguard healthy development of market economics,protect public benefits,protect legal rights and interests of extended investors,and prompt healthy development of CPA industry.There are five parts included in this paper: First, it makes an analysis of the reasons why the CPAs should be responsible in auditing and its significance, also it has a retrospect over the research in this field at home and abroad. Next, it researches into the relevant theories about CPA's auditing responsibilities. Then, introduce and analyse Kelon case. In the fourth part, the paper digs into the problems existing in CPA's auditing responsibilities from several aspects, such as laws and regulations, profession, institution and the CPA himself. At last, trying to be given helpful suggested solutions to the problems existed in Chinese CPA's auditing responsibilities .