Research On Risk Management Of Ruihua Office From The Perspective Of Customer Change

With the rapid development of our country’s economy,third-party audits have an increasingly strong influence on China’s socialist market economy due to its supervisory role in market economy and corporate development.With the continuous development of the social economy,accounting firms have also undergone important changes.Local firms represented by Ruihua Certified Public Accountants have expanded rapidly in recent years and have far exceeded the “four largest international companies” in terms of auditing customer numbers..However,in China’s "buyer’s market" audit structure,it is common for listed companies to dismiss an accounting firm.There are many reasons for dismissal.As a special profit-making service organization,an accounting firm not only needs to meet the needs of audited clients,obtain audit market share,but also facing government supervision and public scrutiny to avoid audit failures and litigation risks.The dual nature of the accounting firm has exposed all kinds of risks and uncertainties at all times.Therefore,how the accounting firm conducts risk management under the circumstances that the frequency of customer changes has been increasing year by year and become a focus of attention in theory and practice.Ruihua Office was punished 14 times by the regulatory authorities in 2015-2017,the most serious of which was that the Ministry of Finance,the Accounting Department,and the Securities Regulatory Commission jointly issued a document requesting that Ruihua Firm suspend the undertaking of a new securities business on February 14,2017.The rectification,this text has caused a sensation in the industry.After statistics,there were 55 listed companies and Ruihua canceled the auditing contract in the A-share market.The ability of Ruihua to acquire customers has also been greatly weakened.Therefore,this article selects Ruihua Office as a case study,and examines the problems and risks faced by Ruihua Law Firm from the perspective of customer change.This article first analyzes the overall operating status of Ruihua Firm,followed by statistics on the inflow and outflow of audited customers of Ruihua Office,as well as the inflow and outflow of customers from 2013 to 2016,which led to changes in Ruihua’s audited customers in recent years.By analyzing the changes in Ruihua’s customers,we find that Ruihua currently has many risks.For example,Ruihua’s client recognition in customer acceptance is in the form of a risk,and it is too aggressive when it comes to customer selection strategies.CPAs lack audit independence in the process of audit,and there are obvious flaws in the audit process control.This series of risks caused the overall quality of Ruihua’s audits to decline,and it was subject to a regulatory agency’s interview on the quality of practice.As a result,Ruihua’s reputation has been damaged,customers have been lost,performance has declined,and even some core personnel have left Ruihua with customer resources.Based on the various risks faced by Ruihua Law Firm,this paper proposes practical and effective countermeasures for the risk management of Ruihua Lawyers from the aspects of strengthening the internal risk management of the firm and improving the overall quality of the CPA itself.This article hopes to provide experience for domestic firms in China through the research of Ruihua’s client changes and risk control.