Case Study On Audit Failure Of Ruihua Certified Public Accountants To Huaze Cobalt Nickel Listed Company

Since the reform and opening up,China's market economic system has been constantly improved and developed,and the establishment of the Shanghai Stock Exchange and the Shenzhen Stock Exchange has provided the domestic companies with the development channel of listing.Listing can provide a wide range of financing channels.However,we should also note that some companies lacking listing qualification may whitewash their financial statements in order to win valuable IPO opportunities,while they can only keep the fraud going after listing in order to meet the requirements of the securities market.Accounting firms that audit listed companies should objectively evaluate whether their financial reports are fair,so as to convey the true operating conditions of listed companies to investors and the public to promote effective allocation of resources.However,in recent years,the audit quality of accounting firms does not meet public expectations,and most financial fraud incidents will lead to audit failure,it is imperative to prevent audit failure.In recent years,the audit failure of the firm even frequently appear in the top of the accounting firms.Ruihua Certified Public Accountants ranked sixth in the ranking of accounting firm business revenue in 2018,and second among domestic accounting firms.However,since 2016,Ruihua has frequently received administrative penalty letters from the CSRC for audit failures.This is not only detrimental to the development of Ruihua,but also to the overall development of domestic accounting firms.Therefore,this paper tries to put forward suggestions on how to prevent audit failure from happening again.Huaze Cobalt & Nickel Listed Company's main business is processing nickel products,its financial fraud case involved the affiliated party transactions,backdoor listings,and other key areas,and Ruihua in it's auditing process made many typical mistakes,so this article will choose this case as the main case and analyze other typical cases of Ruihua.This article used the literature analysis and case study method to study,first reviewing definition of audit failure,causes and prevention countermeasures and summarizing the literature,then using modern risk-oriented auditing theory to analyze Ruihua's problems existing in the audit,the causes of this audit failure,at last putting forward the corresponding improvement suggestions.It was found that Ruihua had problems in notes receivable,purchase and sales contracts,illegal guarantees,related party transactions and other aspects during this case.Combined with the recent typical audit failure cases of Ruihua to explore the reasons behind it,we found that Ruihua had shortcomings in assigning audit project personnel,identifying and evaluating audit risks,implementing audit procedures to deal with audit risks,and carrying out project quality review.Meanwhile,the supervisor and the internal control system of the enterprise itself failed to play a real role.Therefore,this paper puts forward improvement suggestions on how to prevent the recurrence of audit failure in Ruihua.It is pointed out that although the opinions of this paper are mainly about Ruihua,the task of making audit industry better is not only belonged to Ruihua,the development needs every parts' efforts.This paper has enriched the case study library of audit failure,and at the same time can provide suggestions for Ruihua on how to improve the audit quality and seek for further development,and other accounting firms can also learn something from it.