The Study Of Audit Failure Based On The Case Of Sinovel

With the development of China's capital market,the demand for audit is increasing day by day.The role of CPA is becoming more and more important and people regard CPA as "economic police".However,audit failure cases which continuously occurred,such as Wanfu Biotech,Tianneng Technology and Sinovel,made investors suffer huge economic losses.At the same time,it makes the credibility of CPA questioned by the public,leading to a crisis of confidence in the audit industry as a whole and affecting the stable operation and growth of the capital market.Therefore,the in-depth and multi-angle analysis of the audit failure has become an urgent work which needs to be completed.It is of great practical significance to analyze the causes of failure and to explore the preventive measures.In this paper,the achievements of scholars at home and abroad are studied firstly to enrich the theoretical basis of the paper.Then the method of case study is used to reviews the audit failure case of Sinovel to analyze the means and process of fraud in detail.Then,based on risk oriented audit the theory,the factors of audit failure are analyzed from three aspects of the CPA firm and CPA,unit under auditing and social environment.The CPA firm and CPA accept the audit commission lightly without fully understanding the audited units and the environment to assess risk and implementing appropriate audit procedures to deal with risks.There are some deficiencies in the quality control of CPA firms,and the professional ethics of CPA needs to be improved.The internal control environment of the audited entity is poor and financial fraud is carried out to alleviate the debt crisis.Social environment related laws and regulations are lacking and industry supervision and management lag and punishment is lacking.Among them,individual behavior theory was used in the analysis of annual report fraud of Sinovel,the unit under auditing.Finally,according to the analysis results of Sinovel case,the corresponding prevention countermeasures and suggestions are proposed from the following three aspects.The CPA firm and CPA should undertake audit commissions carefully,analyze the internal and external environment of the audited units to assess the risk comprehensively,design and implement appropriate audit procedures,improve the quality control system of the CPA firm and improve the comprehensive quality and professional ethics of CPA.Units under auditing should improve the internal control environment from two aspects of perfecting the independent director system and strengthening the internal audit construction to reduce the risk of material misstatement.From the perspective of social environment,relevant laws and regulations should be improved and the industry supervision and management should be strengthened.