Case Analysis On Audit Failure Of Reanda Auditing Sinovel

People from all walks of life have been plagued by auditing failure since last century.Almost in every time,it damages the interests of investors in our country,reduce the CPA's credibility a lot,many accounting firms are revoked,the frequency of auditing failure has even affected the healthy development of China's CPA industry.In recent years,the country's economic situation changes frequently,as a professional talent,CPAs need to obey the laws,protect the interests of investors and provide powerful guarantee for the healthy development of our country's economy.With so many failure cases of auditing,people start to doubt the quality of the auditing report,the CPA industry bear great pressure and people bring more stringent requirements.CPA's goal is to make sure that serious mistakes are not in the financial statement and give investors auditing opinion in a positive way to enhance the user's trust of the financial report.Therefore,how to achieve these goals and prevent auditing failure has become the focus of many scholars.At present,on the definitions of auditing failure,scholars have different views.They also put forward their own opinions about measures.Therefore,it is of great practical significance to study the CPA auditing failure,which is a guide to the healthy development of China's CPA industry.This article can be divided into five parts,the first part starts from the research background and significance,summarizes the articles about audit failure at home and abroad,and introduces the way of thinking and method,and briefly introduces the research the contents of the article,then uses the structure diagram to show the way of this research.The second part discusses the definition of audit failure,the definition of audit failure,and then gives some performance of audit failure,and then use the theories to explain the causes of audit failure from three aspects.In the third part,this article briefly introduces the accounting firms,business the firm has taken and quality control process,introduces the overall situation of this case,including the situation of CPAs and the accounting firm.It also introduces the administrative punishment of the accounting firms and CPAs,including the cognizance of their actions and the legal provisions of the administrative punishment.The fourth part analyzes the reasons of audit failure from four aspects.First of all,CPAs are insufficient and are not diligent;secondly,defects exist in the internal governance of Reanda and the quality control process,it refers that internal disputes exist in Reanda and defects exist in audit procedures;thirdly,collective fraud of Sinovel increases the difficulty of auditing,this part described the division ofcollective fraud among the managers of Sinovel and the technique of collective fraud used by the managers of Sinovel;finally,the fierce competition in the audit industry increases the asymmetry of information.The fifth part draws the conclusions and lessons of this case.This article deals with Conflict theory in auditing,Principal agent theory and Asymmetric Information theory.This article describes these theories and use the theoretical analysis method to analyze the auditing failure case of Reanda auditing Sinovel Wind Group Company(hereinafter referred to as Sinovel),and putting forward the preventive measures and suggestions of CPA auditing to guide the CPAs to be more diligent and more careful.It can strengthen the quality control of accounting firms and lead to the healthy development of China's CPA industry.In this paper,the analysis of audit failure case show that: first,CPAs have defects in their own quality;second,the practice quality system of accounting firms are not perfect;third,the poor development status of wind power industry is the pressure of Sinovel collective fraud.This article summarizes several lessons from Reanda's audit failure in this case:first of all,CPAs should be diligent in audit process and CPAs should maintain audit professional caution;secondly,accounting firms should establish internal governance mechanisms;finally,companies should operate audit committee system effectively,government should establish the reputation mechanism of CPAs and civil liability system of CPAs.