A Case Study Of The Audit Failure Of Zixin Pharmaceutical By Zhongzhun Certified Public Accountants

Throughout the development of the capital market,the audit failure cases of accounting firms occur frequently.The company’s financial fraud not only causes economic damage to the company and investors,but also has a great negative impact on the audit industry.Among them,the fraud of related party relations and transactions is one of the main forms of audit failure.In order to cope with the fierce competition in the market economy,related party transactions have become a common phenomenon in the daily business activities of enterprises.Normal related party transactions can help enterprises reduce transaction costs and improve transaction efficiency.However,in the case of seeking private interests or performance pressure,enterprises will also use inappropriate related party transactions to transfer interests and manipulate profits,causing losses to shareholders and society.Therefore,how to effectively identify the fraud of related party relationships and related party transactions and reduce the audit failure risk of related party transactions has become the focus of the audit community.Based on this,on the basis of defining relevant concepts,guided by principal-agent theory,information asymmetry theory and audit conflict theory,this paper reviews and analyzes the failure cases of Zixin pharmaceutical audit by zhongzhun certified public accountants,hoping to sound the alarm of China’s audit industry through the summary of the experience of Zixin pharmaceutical audit failure,Avoid the recurrence of similar cases.Through reviewing the occurrence,process and consequences of the whole case,the study analyzes that Zixin pharmaceutical has adopted the way of false transaction with upstream and downstream related enterprises in related party transactions,and believes that on the one hand,the motivation of related party transaction fraud of Zixin pharmaceutical is due to the profit seeking nature of capital and the fundamental purpose of maximizing enterprise profits,On the other hand,the management takes risks to meet external expectations.Under the guidance of principal-agent theory and information asymmetry theory,this study explores the causes of audit failure of China quasi accounting firm from three aspects,and holds that the management of Zixin pharmaceutical deliberately conceals the transaction information of related parties based on information asymmetry is the direct cause of audit failure;The failure of zhongzhun certified public accountants to properly coordinate audit conflicts and benefit distribution,and the existence of illegal audit operations are the root causes of audit failure;The policy and supervision mechanism loopholes make it possible for related party transaction fraud,which is the external cause of audit failure.Based on these three reasons,combined with the specific situation of audit failure of Zixin pharmaceutical,this paper starts from perfecting the internal governance structure and information disclosure system of Zixin pharmaceutical;Improve the auditing standard and management level of zhongzhun certified public accountants;Strengthen external supervision and strengthen punishment for violations,and put forward effective countermeasures to improve audit efficiency from three aspects.It is hoped that this study can effectively standardize the third-party audit process,improve the audit quality,and provide reference for standardizing the information disclosure of related party transactions of Listed Companies in China.