Research On Audit Of Yabaite Co.Ltd., Overseas Projects By Zhonghua Certified Public Accountants

As listed companies follow the footsteps of state-owned enterprises to carry out business in border countries,the demand for good development of enterprises and the protection of assets is constantly increasing,which puts forward higher requirements for the supervision of listed companies and accounting firms,but accounting firms cannot fully meet the increasing requirements of the market at present.If we cannot quickly and effectively improve our professional capabilities and strengthen quality control,accounting firms may not be able to effectively deal with the problems caused by the characteristics of overseas project audit,and thus cannot ensure that the audit quality and audit results are not affected.China’s Foreign Ministry has for the first time publicly named the financial fraud at an overseas project.Yabat inflated its profits through fake cross-border projects,while Zhonghua failed to conduct its audit work diligently and responsibly by issuing standard unqualified audit reports,which led to the failure of its overseas project audit with huge impact.In this paper,problems arising from Zhonghua Law firm’s audit of Jabet are taken as the main body of the study,and various academic articles are comprehensively used to analyze Jabet case in combination with information asymmetry theory,principal-agent theory,risk-oriented audit theory and GONE theory.This paper reviews the process of Zhonghua CPA firm’s failed audit of Yabert’s overseas projects and the punishment result of China Securities Regulatory Commission on the subject and object of the audit,studies the difficulties Zhonghua CPA firm encountered in the process of Yabert’s audit,analyzes the causes of the audit failure,and combines the characteristics of overseas project audit.This paper gives specific opinions on how to carry out the audit work of overseas projects and how to ensure the audit quality of overseas projects.After the analysis,it is learned that the problems of Zhonghua CPA Firm’s audit failure are mainly the quality review and risk control failed to be effective,CPA practice ability is insufficient,CPA failed to maintain professional caution.The reasons for the problems are mainly due to the maintenance of customer relations,the lack of external supervision,the imperfect design of audit system,the pursuit of CPA’s own interests,and the insufficient punishment.Based on the analysis of Yabite enterprise,some suggestions are given to avoid the failure of overseas project audit.Firstly,it is necessary to act in accordance with audit standards,improve the working level of certified public accountants,pay attention to riskoriented audit,maintain professional skepticism,and try new audit methods with information technology.Secondly,strengthen the business quality review of the firm,improve the professional practice level of the firm,carry out overseas joint audit,implement the firm rotation system;Finally,strengthen the supervision of the Ministry of Finance,China Securities Regulatory Commission and China Annotations Association on the audit industry.This paper studies the audit failure of overseas projects,studies various deficiencies in the audit work,discusses why audit failure occurs,and finally gives relevant opinions to avoid the audit failure of overseas projects.The analysis of this paper brings some inspiration for other accounting firms to carry out overseas project audit,so as to drive the healthy development of the industry.