Research On The Improvement Of Audit Quality Of CPAs

Collusion between enterprises,suppliers and related parties in fraud and window-dressing statements has brought many adverse effects on the authenticity of financial information.The innovation of enterprise business model brings new challenges to audit institutions,which not only increases the audit risk,but also increases the difficulty of practice.In order to avoid being eliminated or marginalized,certified public accountants should improve their professional level,improve audit quality,and show their importance and irreplaceable role.In order to adapt to the new business model and audit environment,audit institutions need to further strengthen management and optimize audit methods and procedures.Short sellers have been active in capital markets in recent years,successfully shorting the shares of target companies based on their own research.Short sellers often cite targets’ financial problems in their reports with some justification.Therefore,the practice of short sellers can give some enlightenment to certified public accountants and help them improve audit quality.This paper sorts out the concept,significance and basic steps of short selling,and sorts out the literature on improving audit quality.Existing research shows that the short-seller comment on the compliance of target company,accuracy of financial data and feasibility of business model through on-the-spot investigation,cross validation,speculation and calculation,and therefore occupy information advantage,high gain,and helped capital market find defective companies.Certified public accountant auditing is a kind of institutional arrangement to supervise and check the performance of the auditee,the main purpose of which is to reasonably ensure that there is no material misstatement in financial statements as a whole.Influenced by many factors,there is a gap between the audit services provided by certified public accountants and the needs of audit report users,which is detrimental to the development of the industry in the long run.In order to narrow the gap,it is necessary to improve the quality of CPA audit.There are many literature related to improving the audit quality of certified public accountants,most of which focus on improving personnel independence,professional ethics,professional competence and strengthening the internal management of the firm.Independence is of great significance to the audit process,results and credibility of audit reports.In the case of lack of independence,CPA is tempted or restricted by the auditee or other relevant parties,and it is difficult to collect the desired materials.Subjectively,CPA may be partial to or suspect the auditee,and it is difficult to perform audit work in a fair position,and it is difficult to exert their professional knowledge and judgment ability.Professional ethics can guide auditors to put audit quality in the first place,put an end to the temptation of interests,comply with the requirements of the standards,and be diligent and responsible.Professional competence is the foundation of certified public accountants,and it is the necessary ability to express audit opinions on financial statements.Internal management is an important guarantee for the normal operation of the whole office,which can make the members of the organization actively complete their work,and then achieve the goals of the organization.Improving audit quality is one of the goals of audit firms.Internal management can guide auditors to improve their independence and professional competence,and then improve audit quality.As part of internal management,evaluation and incentive mechanism can help auditors identify their strengths and weaknesses,so as to strengthen learning and improve their work.Effective internal management also helps prevent collusion between the firm and the auditee.On the basis of the concepts and development of short-selling and audit and other relevant theories,this paper chose the event of Muddy waters research short the stocks of Luckin Coffee as the research object.Compared with the accounting firm,short-sellers are more independent,they have a more comprehensive understanding of the target company,follow up significant events of the company in time,pay attention to first-hand data,good at comparing the same index value provided by different information sources.Short-sellers can get high return with a good report,so they are more active in their work.Certified public accountants receive the remuneration from the auditees and are subject to their constraints.Their investigation focus on financial statements,so they do not have a wide range of understanding of the company.Recently,audit work has been been impacted by changes in corporate business models and new technologies,which make audit work more difficult.Due to low audit fees,auditors are not enthusiastic about work.Therefore,in order to improve the audit quality of certified public accountants,relevant departments need to improve legislation,standards and regulations,raise the listing standards,strengthen the management of listed companies,protect the independence of certified public accountants.Certified public accountants should know more about the company,master big data audit,information system audit,block-chain and other new technologies and integrate them into audit work so as to improve their professional competence.Accounting firms shall strengthen internal management,improve and execute the evaluation and incentive mechanism.