An Analysis Of The Economic Policy Making Audits Of The Local Government

To adapt the rapid development of capital market economy,China began to restore the CPA auditing system from 1981.In the 36 years,the CPA industry rapid expansion and the audit status is constantly improved.Its economic security function is becoming more and more prominent and it has become an important part of modern social market economy system.CPA audit as an independent third party,its purpose is to help external stakeholders to master the real financial information of the enterprise and to supervise the management of enterprise.However,influenced by various factors,the CPA audit can't fully discover the material misstatements and false financial information in annual reports of listed companies,so audit failure is not uncommon.This situation has aroused public doubts about the professional ethics of the CPA industry and the annual financial report the CPA audit.The trust between the public and the certified public accountants is frozen.Therefore,how to regulate audit market,maintain audit function,improve audit quality to ensure public trust is the focus of the CPA auditing.This paper points out the reasons for the failure of the annual financial report audit of individual enterprises and puts forwards some countermeasures and suggestions to prevent the audit failure.This paper is based on principal-agent theory,audit conflict theory,information asymmetry theory and rational agent hypothesis.Combining theory and case analysis,this paper analyzes and discusses the failure of Jinya Technology Co.,LTE(hereafter referred to as Jinya Teconology)that SHU LUN PAN CPAs auditing.Comprehensive study of the financial report and the accounting error correction repot of Jinya Teconology,this paper finds the problems existing in the CPA audit:(1)Failed to identify large amount of fictitious advance payments(2)Failed to identify the inflated procurement cost(3)Failed to identify inflated business income and profits(4)Failed to identify the financial fraud between the real controllers of the enterprises with asset reorganization and acquisition enterprises.(5)Failed to implement effective monetary fund audit procedures.Based on above findings,this paper draws a conclusion: audit failure is closely related to audited entity,the CPA firm and the external auditing environment.At last,this paper puts forward the following suggestions to prevent audit failure:(1)The basic premise of preventing audit failure is to ensure the internal control of the enterprise,promote the internal audit construction and improve the enterprise information disclosure system.(2)The main means to prevent audit failure is to strengthen theauditing quality of the CPA audit,enhance the CPA's professional competence and improve the internal quality of the CPA firm.(3)The important measure to prevent audit failure is to regulate the external environment of auditing,improve relevant laws and regulations,strengthen the CPA industry control and introduce the public accountability system.I hope that my research will make a contribution to the CPA audit theory,promote the healthy development of audited entity and the CPA industry.