The Research On Audit Failure Case Of Sinovel Wind Group

In the 40 years of reform and opening up,China's economy has developed rapidly and the socialist market economy has also gradually matured.The audit supervision of the CPA has also been increasingly valued.It not only ensures the steady development of the market economy,but also protects the capital market.Yet,audit problems have also followed.In recent years,the frequent occurrence of audit failures in our country not only detracts from the economic benefits and creditworthiness of enterprises,undermines the interests of many investors in our country,but also greatly reduces the credibility of CPAs and affects the benign development of the entire CPA profession in our country.Certified Public Accountants are the "guards" of economy,the "defenders" of investors' interests,and the "scavengers" of poor financial information of enterprises.They provide auditing services to those audited entities,reviewing major misstatements and bad information in the financial reports of enterprises,and according to the audit information from the corresponding data,the auditors announce the positive and effective audit reports.Nevertheless,with the cases of audit failure being disclosed by SFC repeatedly,the public credibility of quality of the audit report significantly has been reduced.The CPA industry is facing enormous challenges and pressures.How to improve the quality of auditing and guard against audit failure has become the focus of many scholars in our country in recent years.At present,academics give their own opinions on the reasons for the failure of auditing,and put forward their own opinions on the measures to prevent auditing failure.Study on the failure of CPA auditing has very important practical significance for guiding the healthy development of CPA in our country.Based on the principal-agent theory,individual behavior theory and fraud theory,combining with the failed auditing case of Sino-Rua Wind Power Technology Co.,Ltd.(hereinafter referred to as Sinovel),this paper explores the failure problem deeply and analyzes the reasons for the failure,summarizes and analyzes the audit failure,and then finding effective measures to prevent audit failure and improve the quality of audit work.In this article,the reasons and preventive measures,based on failure of Sinovel audit,have three aspects: Reanda Accounting Firm,Sinovel and the overall auditing external environment.Reasons for the audit failure: firstly,Reanda's audit projects were undertaken overly sloppily,the risk assessment was not in point,the design of internal control audit was overshadowed,the revenue cycle audit was in disorder,the professional qualification of firm accountants was not high,and the professional ethics was not firm.Second,collective fraud in Sinovel pose great risks to accountants.Third,the external auditing environment,as a whole,is not optimistic.Administrative penalties are slow,punishments are too light,audit failure costs are too low,and those elements directly or indirectly affect the quality of audit work.While analyzing the reasons,this article also sums up the lessons of failure: Certified Public Accountants should be diligent and responsible,keep cautious working attitude at all times,improve their professional ethics and moral qualities;establish a reasonable rewards and punishments system,implement the rating mechanism of accountants and advocate strategy of Win-win cooperation and seek common development;and enterprises should be improved the internal control system,improve the governance structure,improve the quality of their financial staff work.Finally besides the internal elements,the community also has the responsibility to build a good audit environment to reduce the audit failure rate,aiming to improve the quality of the overall audit of the industry.