A Case Study On The Failure Of Zhonghua Institute’s Audit Of Abbott’s Cross-border Business

In recent years,the frequent occurrence of audit failure cases has aroused great attention from all walks of life.Audit failure makes it difficult for the expected users of financial statements to make correct judgments based on the published financial data,which has a serious adverse impact on the whole audit industry.Therefore,the research on the causes of audit failure and prevention is urgent.With the rapid development of cross-border business,the demand for cross-border business audit is increasing.If accounting firms can not effectively improve their professional competence and strengthen quality control,the audit risk caused by the increase of business difficulty may not be effectively addressed,and the audit quality will not be guaranteed,and the possibility of audit failure will increase.Jiangsu yabaite Technology Co.,Ltd.financial fraud case is the first cross-border business fraud case named by the Ministry of foreign affairs of China.In 2015,yabaite fictitious Pakistan Multan public transport project cross-border project,which falsely increased profits by more than 47.09%;Zhonghua accounting firm failed to diligently issue a standard unqualified audit report in the audit process,resulting in the failure of cross-border business audit,causing the China’s securities market and certified public accountant industry have been greatly shaken.This paper analyzes the case,based on the review of existing research,using risk-based audit theory,information asymmetry theory and cost-benefit theory,from the perspective of audit subjects and external supervision to find out the causes of cross-border business audit failure and lead to thinking.It is found that Zhonghua accounting firm has the problems of imperfect quality control system and unreasonable allocation of audit resources;certified public accountants have the problems of not maintaining due professional prudence,inadequate design of audit procedures and lack of independence;external supervision has the problems of inadequate supervision and punishment by CSRC.Through the above analysis,we think about how to prevent the failure of cross-border business audit: cross-border business audit is very difficult and risky,so accounting firms should strengthen the quality control of cross-border business audit,establish cross-border information exchange platform and cultivate cross-border business audit talents;certified public accountants should always keep professional caution,implement cross-border business audit field work and strengthen cross-border business audit Business audit supervises and reviews the work,pays attention to verifying the authenticity of cash flow and matching cross-border business transaction,payment and logistics information;external supervision should strengthen cross-border business audit supervision and strengthen supervision of securities companies.