A Case Study Of Audit Failures In Accounting Firms

Accounting information is not only an important data for business operators to understand their own situation,but also an important reference for the public to evaluate the company and make investment decisions.With the improvement of the public's attention and importance to accounting information,the audit of Certified Public Accountants has exposed many problems,which have been repeatedly exposed by the media as audit failures,leading to the distrust of certified public accountants.However,due to the influence of information asymmetry and other factors,certified public accountants can only provide a higher degree of assurance for accounting information,rather than 100%confirmation.Therefore,how to restore the society's trust in the audit of certified public accountants,reshape the authority of certified public accountants to avoid audit failure,has become a key research topic for professionals and scholars.The research problem of this paper is "Case Study on audit failure of accounting firms".Based on the mechanism of internal and external factors influencing audit results of accounting firms,a theoretical analysis framework is established.Through principal-agent theory,fraud iceberg theory,internal control theory,the low quality of internal audit and insufficient external supervision of accounting firms lead to audit failure.This paper uses the method of literature research and case analysis to introduce the financial fraud of Kangde new composite material Co.,Ltd.,analyze the situation of Ruihua accounting firm's non-compliance with audit standards in the audit process,and analyze the causes of audit failure and study the countermeasures.This paper is divided into six parts:the first part is the introduction,which mainly introduces the research background and significance,and the research status at home and abroad;the second part is the theoretical part,which mainly introduces the related theories of audit failure,including the concept of audit failure and the factors affecting audit failure;the third part is the case part,which introduces the event background,the new case process of Ruihua Institute audit Kangde;the fourth partThe fifth part puts forward countermeasures to prevent audit failure according to the reasons of audit failure;the sixth part is the conclusion and enlightenment.This paper mainly analyzes the problems of CPA's failure to respond to financial warning signals,the lack of independence of accounting firms,and the lack of industry supervision.The corresponding preventive measures are to strengthen the internal governance of accounting firms,to emphasize the professional skepticism of employees,to integrate regulatory resources in the industry and to strengthen supervision.The main innovation of this paper:This paper explores the audit problems of auditors from the perspective of financial data such as the authenticity of monetary funds and abnormal gross profit rate.Specifically,the certified public accountant did not implement effective substantive analysis procedures so as not to find any abnormal monetary capital;the certified public accountant did not maintain due professional doubt and did not pay attention to the warning signal of abnormal gross profit rate.The research value of this paper:the conclusion of this paper will give enlightenment to the relevant parties that cause the frequent failure of audit in China's accounting firms,which will help to improve the audit quality and reduce the occurrence of audit failure.