Research On Causes And Solutions Of Audit Failure Of China Concepts Stock Companies

Based on the fact that Chinese companies' share are going short on oversea capital market,27 Chinese companies which were delisted for credit crisis eruption in 2011 are studied from the perspective of audit failure by the method of literature research and case study.From this study,it's found that most of Chinese companies which were going short and delisted by SEC,even identified with financial fraud are not mainstream of Chinese share company.After dressing up by foreign intermediaries,most of these problematic small companies are listed in USA by reverse stroke-over.The market value of these companies is about 5.5 million dollars to 300 million dollars.Through further analysis of the financial fraud of these companies,it is found that forge method from these Chinese companies,which are not in accordance with the requirements of the market,is not complicated or even easy to be found.However,the accounting firms have given unreserved audits opinion in the audit of the listed reports and in the daily audit work.The audit failure of Chinese share companies has caused huge losses to domestic and foreign investors,and has also damaged the image of Chinese enterprises heavily.According to the relevant literature and investigation data,this paper believes that the failure of Chinese stock companies' audit is due to the lack of independence of the accounting firms,the many inconveniences of the cross-border audit supervision and the lack of professional skepticism of certified public accountant.In order to prevent the serious negative impact of the failure of the companies' audit on the Chinese enterprises,this paper gives the corresponding countermeasures from three aspects of the accounting firm,the Chinese stock companies and the external supervision agency.