Ruihua's Analysis On The Failure Of Kang Dexin's Audit

As an independent third-party intermediary service agency,accounting firm plays the role of economic police in the economic society,and it is also a bridge between listed companies,shareholders and other stakeholders.The purpose of audit services provided by accounting firms is to provide reasonable assurance for the expected users of financial statements.However,in recent years,audit failures have occurred frequently,which has a negative impact on the development of the audit industry.Ruihua is the second largest domestic capital firm in China,but it has many flaws and frequent audit failures.In a series of audit failures,kangdexin is the starting point for Ruihua to commit fraud.Its fraud means are very representative,and the amount of fraud is very large,and the behavior is extremely bad,which is called the most financial fraud of a shares.Therefore,this paper chooses Ruihua to study the audit failure of kangdexin,and analyzes the problems and reasons in the audit process of Ruihua.Through these studies,it is of great significance for the firms to improve the system and prevent audit failure.Through the research of the author,it is found that in the process of audit of kangdexin,Ruihua has problems before,during and after the audit,and these problems are all around a key point,namely,tainted certified public accountant.Therefore,this paper takes tainted certified public accountant as a breakthrough point,analyzes this case,and finds that Ruihua has the following problems in the audit process:first,before the implementation of the audit,Ruihua accounting firm did not control the auditors well,appointed tainted certified public accountant,and did not do the business undertaking risk assessment work well.Second,in the process of audit implementation,the implementation of substantive procedures is not in place,the audit of operating income is only a formality,and the internal control test procedures are not implemented.Third,after the audit,Ruihua did not carry out strict quality assessment,and the quality control system failed to be effectively implemented.In view of the above analysis,the author believes that there are three main reasons for Ruihua's failure in the audit of kangdexin.First,Ruihua accounting firm's identification and response to risks in the process of rapid expansion through merger,as well as the lack of integration of human resources and customer resources,leading to outstanding problems in advance,high business risks and improper personnel arrangement Li.Second,there are defects in the quality control,risk management and personnel management system of Ruihua accounting firm,which results in the failure to play a good role of supervision and control in the audit process and after the audit;third,China's external supervision is not strong,the punishment is weak,and it can not play a good role of warning and prevention.Therefore,in order to prevent audit failure,on the one hand,the firm itself needs to improve the ability of risk prevention and resolution,pay attention to the integration of human resources and customer resources,and make clear whether to absorb or discard the tainted CPA.And establish and perfect the quality control system,improve and perfect the personnel management and risk management system,so as to control and arrange the tainted CPA and other personnel reasonably,and improve the audit quality.On the other hand,the external regulators should improve the supervision and punishment mechanism,improve the supervision efficiency,and link the punishment mechanism with the reputation mechanism,so as to play a good warning role for the derelict personnel,in order to prevent the recidivism.Ruihua's failure to kangdexin's audit is a great blow to the audit industry,but also a wake-up call for the capital market.This failure has its own characteristics and commonalities.It not only exposes the problems of one firm,but also reveals the imperfection of China's regulatory system.Only by learning from this failure can we further improve the audit institutions and regulatory environment" Disadvantages "to promote the healthy development of audit industry in China.This paper studies and analyzes the main reasons for the failure of this audit,and in view of the above analysis,with reference to the research of previous scholars,combined with the characteristics of Ruihua's audit of kangdexin,puts forward targeted and more feasible preventive measures,which provides reference for Ruihua and other accounting firms,and has certain reference significance.The innovation of this paper lies in,first,from the research perspective,this paper focuses on the negative role of tainted certified public accountants,and as a breakthrough point,reveals the problems of Ruihua's audit failure of kangdexin,and further analyzes the reasons for its failure.In the past research,considering that there are few cases from this perspective,this paper makes up for the lack of this research,highlighting the importance of the independence of the tainted CPA in the audit failure cases.Second,in the case study,that is,to control the quality from the root,and to control the factors affecting the product quality in all the main stages of the production or service process.In this paper,we always focus on the key point of tainted CPA,and analyze all stages of the whole audit process.It makes the research of audit quality and the analysis of problems clearer and more targeted.