Research On The Causes And Effects Of Audit Failure Of Ruihua

In the capital market,the owner of the company often hires an external independent manager to manage the company,which easily leads to the owner's inability to obtain all the company's information.At this time,the company owner and other investors need an external independent third party to audit provide information to stakeholders.However,in recent years,more and more accounting firms in China have been punished by the China Securities Regulatory Commission(CSRC),and audit failures have occurred from time to time.In the statistics of audit failure cases in China in the past five years,Ruihua Certified Public Accountants(hereinafter referred to as Ruihua)was punished the most by the CSRC.In 2019,Ruihua was pushed to the top of the list because of audit failures.Due to Ruihua's drag,many IPO projects of Ruihua's clients were suspended,and refinancing of many companies was also stranded,showing the great impact of audit failure.At present,the research results of audit failure in China are mainly concentrated on the theoretical level,and there are few actual case studies.At present,the research on audit failure mainly focuses on listed companies,focusing on financial fraud,financial restatement,and accounting information disclosure.Rarely,firms are used as research objects.Therefore,this article takes the firm as the research object,and it is very necessary to explore the causes and effects of its continuous audit failure.Therefore,this paper uses risk-oriented auditing and other theories.First,enumerate the current status of audit failures between China and Ruihua,and then analyze the reasons for the audit failures punished by the China Securities Regulatory Commission in the past three years,followed by the impact of audit failures.According to the specific reasons for Ruihua's failure in the past three years,it provides targeted preventive measures.The first conclusion of this paper is that the reasons for Ruihua's audit failure include unsound Ruihua's quality control system and insufficient training of employees' quality;certified public accountants failing to maintain the necessary professional suspicions and inadequate implementation of audit procedures;the external regulatory environment has defects and fine insufficient and long penalty period.Second,the impact of audit failure includes the impact on enterprises,certified public accountants,Ruihua and other customers of Ruihua.The third is preventive countermeasures against audit failures.Firms need to improve overall quality control and strengthen the quality training of employees;certified public accountants need to maintain sufficient professional suspicion and strictly implement audit procedures;supervision should increase fines and increase the number of audits to reduce penalties cycle.