Research On The Reasons And Consequence Of Auditing Failure Of Zhonglei Certified Public Accountants

Audit as one mechanism of the corporate governance and market supervision,its quality determines the reality and fairness of financial reporting information.Audit failure events not only reduces the certified public accountants and public accounting firms credit,affect the survival and healthy development of the auditing profession,also harm the interests of investors,interfere with the normal operation of the capital market.Wanfushengke co.,LTD.(short for "wanfushengke" in this paper)is the first enterprise in our country to be forced delisted by the regulator due to financial fraud,which has had a bad influence on the market and investors.As the audit institution of the financial report of wanfushengke co.,LTD.,in the auditing process of financial reports after the IPO of wanfushengke co.,ltd.in 2008/2010,and after the IPO in 2011,it failed to fulfill the obligations of the firm to fulfill its due diligence,and then failed to audit.In view of the failure of zhonglei public accountancy firm fail to audit wanfushengke co.,LTD.This study focuses to show the realistic significance to the reform of China's regulatory system and offer the warning to the CPA and the certified accountant.This article is based on review and summarizes the domestic and foreign scholars about audit failure and related theoretical research,through comparative analysis,from two aspects: firms and certified public accountants,explore the reasons for the failure of the audit and economic consequences.After the introduction of the audit failure event,this paper analyzes the situation of the audit of wanfushengke,the financial situation of wanfushengke,and the financial fraud disclosed by the regulatory agency.In this paper,the audit experience,market share,audit fees and audit tenure of the audit firm are further studied.The research focuses on the comparison between the competitors and the average level of the industry,so as to probe into the reasons for the failure of audit.Finally,this paper analyzes the economic consequences of this audit failure to zhonglei accounting firm from the perspective of customer quantity and audit fee.It has been found that though the company has the professional competence,the main reason why this audit has failed is as follow: Fist,the client does not pay enough attention to it: Second,the signature accountant personal professional competence is insufficient;Third,there is a certain level of low price range for attracting clients.In terms of the economic consequences of the audit failure,this paper finds that the CSRC has made an unprecedented administrative penalty against zhonglei accounting firm,and revoked the license of its securities service business,resulting in the serious loss of clients and the merger of other firms.Audit work began later in our country,with the development,it's risk has become an urgent practical problem to be solved in China's auditing practice.At present,the administrative penalty takes the leading position in the investigation of the illegal behavior of accounting firm.It is an important part of the audit process to avoid the audit risk by taking advantage of the industry expertise and maintaining the proper occupational prudence.It is of great significance to strengthen audit risk control,guarantee and improve audit quality.The study of this paper is to remind accounting firms and certified public accountants to learn from them and to improve their professional competence and independence in the audit work.