Case Study On Audit Failure Of GP Certified Public Accountants To Kangmei Pharmaceutical Company Limitied

The rapid development of modern economy separates the management right and ownership of enterprises,and the owners of enterprises indirectly participate in the operation and management of companies.However,due to the different interests pursued by operators and owners,the financial fraud of management often occurs.To intensively keep the owners from financial risk,certified public accountants have emerged.However,in recent years,CPA has frequently failed to find the serious financial fraud of the audited unit,resulting in the issuance of false financial reports,which seriously shakes the public's confidence in the CPA industry.How to enhance the credibility of the firm,improve the audit quality and prevent audit failure has become a top priority.In this paper,GP certified public accountants' audit of Kangmei Pharmaceutical Co.,Ltd.is taken as a case study to discuss the audit failure of certified public accountants.Based on the review of domestic and foreign literatures on audit quality and audit failure,this paper studies the failure of GP certified public accountants in the audit of Kangmei Pharmaceutical Co.,Ltd.by using risk oriented audit theory and principal-agent theory.It is believed that GP certified public accountants failed to find out the major frauds in the audit,such as the false increase of operating revenue and monetary capital of Kangmei pharmaceutical,due to its failure to carefully assess the risks before the audit,failure to maintain professional doubt in the audit process,improper application of analysis procedures and letter verification procedures,and inadequate quality control after the audit,and other factors,and proposed that the firm was undertaking Before business,we should carefully assess business risks,reasonably use analysis procedures,maintain professional doubt,strengthen internal supervision of the firm,improve the quality review mechanism of the firm,standardize the audit market competition environment and establish a good and orderly legal supervision environment.The problems of GP certified public accountants in the audit of Kangmei Pharmaceutical Co.,Ltd.are common in the whole certified public accountants industry.I hope this study can provide reference for the domestic certified public accountants to prevent audit failure,and contribute to improving the quality of domestic audit business and maintaining the market economic order...