A Research On The Confirmation Procedure In The Audit Failure

Obtaining sufficient and appropriate audit evidence is the basis of ensuring the quality of audit.In recent years,the incremental updating and standardization of confirmation standards fully show that regulators attach importance to confirmation procedures and the importance of confirmation procedures for audit.However,in the process of the regulatory authorities severely cracking down on financial fraud,the problem of confirmation procedure has become more and more severe over the years.KDX,GEEYA and other audit failure cases all reflect the problems of confirmation certificates.In addition,confirmation issues show various difficulties and pain points in different industries,so solving the problem of confirmation procedure is the only way to maintain the sustainable development of the audit market.Therefore,this paper uses the methods of literature research,case analysis and descriptive statistical analysis to study through the ideas of raising,analyzing and solving problems.Firstly,the audit failure case of Beijing Blue Mountains Technology audited by Zhongxingcai Guanghua Accounting firm announced by CSRC in 2021 is selected as the research object.Secondly,based on the theory of information asymmetry,principal-agent and audit conflict,the data in the Finance Bureau,China Securities Regulatory Commission and Local Securities Regulatory Bureau and Cninfo Data Network are screened and sorted out,analysing of the overall situation of the implementation of correspondence procedure by Accounting firms in China.Thirdly,according to the performance of the confirmation party,the asked party and the supervisor involved in the confirmation process,combined with the risk points of the electronic equipment manufacturing industry to which the case belongs,it makes an in-depth analysis.finally,starting from the characteristics of the industry,this paper puts forward a targeted solution to the participants in the whole chain of confirmation.The main conclusions of this study are as follows:(1)the problem of confirmation procedure is significant,which is concentrated in manufacturing audit clients.(2)the failure of confirmation is mainly manifested in the following three aspects: non-compliance with program implement and invalid reply information;in content,it is mainly reflected in two aspects: income recognition,true accuracy and recyclability of accounts receivable.(3)the critical points of confirmation in electronic equipment manufacturing industry are: the changes of enterprises,the situation of industry and industry are considered in the decision-making of confirmation,and the capital demand,R&D technology and the concentration of related customers are paid attention to in the implementation of confirmation.(4)to solve the problem of confirmation procedure,accounting firms should set up a confirmation assessment system,establish a risk prevention mechanism of confirmation failure,and pay attention to the risk points for electronic equipment manufacturing industry;certified public accountants should carry out confirmation verification based on business process and maintain professional doubt in high-risk areas of the industry;the auditees must improve the internal control system and understand to follow the confirmation standards.The party being inquired should standardize the business process of confirmation and smooth the feedback channel of confirmation.At the same time,the regulatory authorities should improve the rules of the whole chain of confirmation and speed up the development of confirmation informatization.This study is helpful to enrich the research field of confirmation procedure,standardizing the development of the electronic equipment manufacturing industry,developing the whole chain of confirmation scientifically,and making confirmation supervision more effective.However,this paper can not obtain all the undisclosed information,and there are some limitations on the adequacy of data collection.