Case Study On Audit Failure Of K Company By J Accounting Firm

With the vigorous development of China’s economy,the competition in the capital market is becoming increasingly fierce.Many enterprises may hide their true financial status in order to stand out,and firms or certified public accountants may be under pressure to provide false financial reports,resulting in frequent audit failure cases.In numerous audit failure cases,especially in pharmaceutical enterprises.This paper takes the audit failure of K company by J accounting firm as an example and conducts relevant research through literature research method and case analysis method.Based on the definition,reasons and preventive measures of audit failure,this paper has consulted relevant literatures at home and abroad,clarified the research content and views of this topic,sorted out the research context,and carried out the whole paper on the basis of the theories related to audit failure,in order to pave the way for the subsequent case analysis.The author chose a representative K enterprise in the pharmaceutical industry with a large amount of fraud as the case study object.By studying the current situation of accounting firms in China,this paper summarizes the reasons and common characteristics of audit failure,and discusses the influence of audit failure on society,accounting firms and investors.The author discusses the problems existing in the audit of J institute,and analyzes the reasons for the failure of the audit according to the above-mentioned theories and cases.From as the main body of the audit firm and two aspects in this paper,the reasons for certified public accountants,based on the analysis of J firm audit failure reason,this article from the perspective of audit failure in its narrow sense,stand in the perspective of audit main body,including the firm to understand the auditees industry and environment is not enough in-depth and firm quality control defects,certified public accountants audit program execution does not reach the designated position,not diligently,and not as professional skepticism,etc.Finally,based on the modern risk-oriented theory,the paper gives some Suggestions on preventing audit failure and reducing audit risk,draws a conclusion and looks forward to the future research and industry development.The innovation of this article is that there are many factors which can lead to audit failure,level is very wide also involved,but the author thinks that the auditees financial fraud,external factors such as industry regulatory environment is weak,not the fundamental reasons of audit failure,therefore eliminated when analyzing the external influence factors,only stand in the audit main body Angle respectively from certified public accountants,certified public accountant for further detailed analysis,hope to be able to further determine the cause of audit failure,and on the basis of the theory of modern risk-oriented targeted preventive or Suggestions for improvement are put forward,such as using PDCA cycle method and Bibexcel software.At the same time,it innovates the audit method,including the use of the superposition test method,the phased test method and the analysis of the cash flow statement data to verify the authenticity and rationality of the enterprise’s business processing.The deficiency is that there are not enough data and concrete data to support the theory,and the content needs to be improved.