The Research On CPA Legal Liability Issues In The Case Of Wanfu Biotechnology Company

As the "watch dog" of the securities market, the certified public accountant (CPA) is an important component of the market mechanism and plays an important role to the order and healthy development of the market economy. In recent years, financial scandals happened frequently in eastern countries. Accounting firms are more and more involved into various lawsuit cases. For example, Enron failure, which shocked the world, led to the bankruptcy of Andersen, making Five Biggest to be the current Four Big. In the meantime, the capital market in our country isn’t calm. From the Yin Guang Xia Event in the Main Board to the Green Earth Event in the SME Board, Fraud listed just like a plague spread quickly in our securities market. Litigations against the CPA are always related to the IPO audit. In September2012, the case of Wanfu biotechnology, which is the first IPO fraud case in the gem, hits turbulence in the society again. As the auditing institution, Zhonglei Certified Public Accountants Ltd. was lack of due professional care in its auditing of Wanfu biotechnology’s annual financial statements from2008to2011, and the audit process did not comply with the relevant independent auditing standard. By irresponsibly issuing false auditing statements, Zhonglei misguided the investors, which caused an enormous loss to them. So, this case leads people to pay high attention to the CPA legal liability once again.This paper discusses the legal liability of Wanfu Biotechnology case from four parts. First, the paper makes a brief introduction of the background and meaning of study. It also has a retrospect over the research in this field at home and abroad. Second, it analyzes the CPA legal liability based on the information asymmetry theory and principal-agent theory. Third, the paper introduces the Wanfu Biotechnology case, analyzes the illegal behaviors of the company and its consequences, and then lays spepial stress on the analysis of the CPA legal liability. Afterwards the paper puts forward the existing problems and analyzes the causes. At last, combining with the causes of the problems found in Wanfu Biotechnology case, it gets some inspiration for the specification of CPA legal liability.