A Case Study Of Audit Failure Based On The Audit Conflict Model

In recent years,the exposure of international financial scandal and the emergence of punishment announcements from the domestic securities regulatory commission have brought the huge impact to the world and Chinese capital market and supervision institutions,which also make the auditor independence and audit quality attract more and more attention.In order to effectively curb of financial frauds and audit failure,this thesis firstreviews the definition,the formation and the constraints of audit failure in detail,and makes clear the audit failure in this paper through stressing auditor compliance with auditing standards as the criterion for judgement of audit failure.And then,this paper summarizes the characteristics of the audit failure cases in China,making use of statistics analysis,and analyzes the possible decisions of audit clients and auditors in the course of audit from the perspective of the interests conflict between the two sides.On the basis of this game analysis,we establishes the audit conflict model,which can be used to identify the audit failure,from the four respects of the power drive and restriction factors of management authority and auditors.Thereby,the countermeasures to audit failure are concluded which provide methodological support for the following case.Finally,this article discusses the case of Sanxia New Building Materials Co.,Ltd,according to the audit conflict model and proposes some suggestions to improve audit quality and avoid audit failure respectively from the angle of management authority and auditor through comparing the game powers and analyzing the strategic choices of both sides.