Research On The Audit Failure Of Accounting Firms

In recent years,there are many cases of audit failure in the securities market.Before Kangmei pharmaceutical huge funds missing,after the blue Mountain technology dragon financial fraud.What is the role of accounting firms as independent external auditors in this context? Based on the administrative penalty announcement issued by China Securities Regulatory Commission(CSRC)from 2018 to 2022,this paper takes the case of Dongfang Jinyu audited by Dahua Firm as the research object,discusses the typical means of Dongfang Jinyu using holding companies to conduct financial fraud,and deeply analyzes its adverse impact on the audit industry.Through a comprehensive analysis of the overall characteristics of the audit industry in the past five years and the individual characteristics of Dongfang Jinyu case,the causes of audit failure and its applicable solutions are deeply discussed from multiple perspectives.This paper is divided into four parts.The first part collates the literature related to audit failure and clearly defines the concepts of audit failure,audit risk,financial fraud and audit responsibility.Guided by modern risk-oriented theory,principle-agent theory and information asymmetry theory,it analyzes the causes of audit failure.The second part sorts out the administrative penalty announcements disclosed by China Securities Regulatory Commission from 2018 to 2022,statistics the audit standards that certified public accountants are prone to violate in audit work,analyzes the administrative penalty for audit failure of accounting firms and the continuous audit failure of accounting firms,and obtains the common problems existing in audit failure cases of certified public accountants and accounting firms.At the same time,it clarifies the punishment of the audit subject after the occurrence of audit failure,and obtains the impact of audit failure.On the whole,the punishment for relevant personnel in such incidents is relatively light and the deterrence is insufficient,and the public’s trust in audit work will be reduced after the occurrence.The third part analyzes the case of Dahua Firm’s audit failure of Dongfang Jinyu.Firstly,this paper reviews the case,introduces the basic information of both parties,sorts out the means of financial fraud conducted by Dongfang Jinyu and the audit standards violated by Dahua Accounting Firm in this audit,and sorts out the specific administrative punishment means of this case.Secondly,it analyzes the impact of this event on the audit subject,the audited unit and the capital market.Finally,the reasons for audit failure are analyzed from the perspectives of certified public accountants,accounting firms and industry supervision.The fourth part combines the above study on audit failure cases,from the three perspectives of certified public accountants,accounting firms and industry supervision,and starts from three aspects of improving the ability of auditors,improving the audit quality of firms and standardizing the audit industry.This paper puts forward some measures to deal with audit failure,such as strengthening the training of auditors,improving the quality control of the firm,strengthening the punishment of relevant departments and establishing an information exchange platform.This paper aims to provide effective suggestions for accounting firms to prevent audit failure through research and analysis,and hopes that relevant subjects in the industry can learn from experience and fulfill their duties as gatekeepers of the capital market.