| Independent auditing in capital market is an important mechanism to ensure the quality of accounting information and maintain market order.However,in recent years,there have been frequent cases of audit failure in the capital market.In the five years from 2014 to 2018,the SFC punished up to 21 accounting firms and related CPAs for audit failure.In these cases of audit failure,although most accounting firms and certified public accountants believe that audit failure is caused by the inherent limitation of audit in their administrative appeals,in fact,they all have the problems of failing to design audit procedures rationally and carry out audit work effectively in accordance with audit standards,and the management and control of the supervisory level are not comprehensive enough,thus failing to find out that they have been subjected to audit failure.The consequences of fraudulent practices by auditors.For a long time,CPAs have shown themselves as "an independent and impartial third party".The frequent occurrence of audit failure affects the healthy and orderly development of China's capital market,and also challenges the credibility of the audit industry.Therefore,it is of great significance to analyze the possible causes of audit failure and provide relevant enlightenment for future audit work,which will improve audit quality and protect the order of capital market.This paper mainly studies the failure cases of IPO audit and annual report audit of DY Co.,Ltd.by case study method with XY Accounting Firm.Based on the specific requirements for the implementation of audit procedures in the current auditing standards and the current situation of China's supervision of the auditing industry,this paper makes a detailed analysis of the fraudulent means in the financial fraud incident of DY Company and the audit work carried out by XY and in the auditing project,and finds that the audit failure may be caused by the following aspects: First,when the CPA implements the auditing procedure,Improper assessment of major misstatement risk areas,inadequate implementation of analysis p rocedures,lack of understanding of internal control and effectiveness testing,lack of professional prudence and skepticism,etc.,insufficient consideration of accounting firms in undertaking business,imperfect three-level audit manuscript review system,and insufficient external supervision and control of the head office's branch office under the B and branch office model;The reasons for the low punishment of violations and the unbalanced responsibility of the relevant subjects are also discussed.In view of the possible reasons for the above audit failures,this paper finally puts forward the corresponding case enlightenment.Firstly,CPAs should correctly assess the risk areas of material misstatement,strengthen the application of analytical procedures,effectively carry out internal control tests and maintain appropriate professional prudence and skepticism throughout the audit process;secondly,CPA firms should carefully consider the risks of the project,strictly implement the three-level review system of audit manuscripts and strengthen it.The management and control of each branch under the management mode of its own general branch office;Finally,the regulatory authorities should also increase the cost of violations and establish a sound responsibility system.This study provides a decision-making reference for accounting firms to prevent audit failure risk,and also provides a reference for the relevant regulatory departments of capital market to improve the regulatory measures to improve the ov erall audit quality. |
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