The Analysis Of The Cause And Precaution Of Certified Public Accountant(CPA)’s Audit Failure

With the development of market economy and the improvement of people’s standard of living,more and more people participate into the market investment activities.However,the audit done by CPAs,as an activity to verify and conclude the truthfulness of the financial information of the entity being audited,substantially affects the investors’ decision.Hence,ensuring the quality of the audit activities becomes an important method to guarantee smooth and healthy development of the market.Since CPAs commence auditing,however,the problem of audit failure has never disappeared.From the Enron Incident as well as WorldCom Incident in the U.S.,to the domestic "Lv Da Di incident","Yin Guang Sha incident",and more recently,"Da Zhi Hui incident" and "Hua Rui Feng Dian incident." These incidents harmed people’s trust to audit,substantially impaired the function of audit,and even discouraged investors’ confidence in investment,which,in general,becomes an impediment to the development of market economy and national economy.Therefore,it theoretically and realistically important to both enhance the quality of audit and reduce the rate of error by studying and analyzing the causation and mechanism of failed audit cases,and by making corresponding improvement.This dissertation takes Shu Lun Pan CPAs’ failed audit to ST Sinopharm as an example,which was most recently publicized by the Securities Regulatory Commission of China,to illustrate this issue.This dissertation consists of six parts:the first part demonstrates the necessity and significance of studying the issue by combining the present general background and the achievements reached by major specialists both at home and abroad.Also,it summarizes the content of and the method used by the dissertation.Furthermore,it indicates where the creation is and where the deficiency exists;the second part demonstrates and distinguishes the notion of audit failure from other relevant notions.Also,it analyzes the issue by inviting relevant theories;the third part Summarizes the penalty announcements of the CSRC in recent years analyzes the causation of the audit failure.It looks to specific aspect of CPAs,accountant firms,as well as other outside circumstance;the fourth part proposed the corresponding precautions for the third part;the fifth part analyzes the problems that exist in audit activities by discussing particular cases;the sixth part draw the conclusion of the dissertation.