Case Analysis Of Zhongtianyun’s Audit Failure On Shengtong Group’s Issuing Corporate Bonds

With the rapid development of China’s bond market in recent years,it is difficult for external investors to determine the authenticity of their financial statements when issuing bonds,especially when unlisted enterprises issue corporate bonds,so audit reports become very important.However,at present,the audit methods and risk assessment standards of corporate bonds have not been clearly defined,the IPO audit standards referred to in practice do not fully adapt to the characteristics of corporate bond audit,and the risk assessment level of corporate bond audit projects is often low,resulting in an increase in audit risk.In recent years,some enterprises issuing corporate bonds have problems such as financial fraud and credit risk,which have affected investors’ and the public’s confidence in the bond market.The failure of auditing the issuance of corporate bonds has also damaged the reputation of accounting firms and certified public accountants,and weakened public confidence in auditing.Therefore,the research on the audit failure of issuing corporate bonds has certain practical significance for standardizing the corporate bond market and the audit industry.This paper mainly adopts the methods of literature research and case study,takes the case of Shengtong Group’s audit failure of corporate bonds issued by Zhongtianyun Firm as the research object,according to the general idea of "background research theoretical overview case display cause analysis summary enlightenment",and on the premise of combing the literature at home and abroad,refines the causes of audit failure Based on the investigation report of the Securities Regulatory Commission,this paper analyzes the process of the failure of Zhongtianyun’s audit of Shengtong Group’s issuance of corporate bonds,summarizes the reasons from three aspects: Certified Public Accountants,accounting firms and audit practice environment,and puts forward relevant suggestions for certified public accountants,accounting firms and regulatory agencies,so as to draw lessons from preventing the failure of audit of issuing corporate bonds.The main framework of this paper has six parts.The first part mainly describes the research background and significance,combs the research results of domestic and foreign scholars on the issuance of corporate bonds,the factors affecting audit failure and preventive measures,and introduces the research ideas,methods and basic framework.The second part focuses on the definition and characteristics of the audit of issuing corporate bonds,and summarizes the general causes and theoretical basis of the failure of the audit of issuing corporate bonds.The audit of issuing corporate bonds refers to the audit of the three-year and one phase financial statements of the bond issuer by accounting firms to ensure that the financial information disclosure of the issuer in the process of issuing bonds is true,accurate and complete.Its purpose is to assess whether the issuer has sufficient repayment ability and solvency,as well as whether it meets the requirements of relevant laws,regulations and normative documents.The third part first introduces the basic situation of Zhongtianyun Firm and Shengtong Group,reviews the fraud of Shengtong Group’s corporate bond issuance,summarizes the specific facts of Shengtong Group’s false statements by means of fictitious purchase and sale business and modifying audited financial statements,and the manifestations of Zhongtianyun’s failure to audit the issuance of corporate bonds,and then describes the punishment results of the SFC on Zhongtianyun Firm,Shengtong Group and related personnel.The fourth part analyzes the reasons for the failure of Zhongtianyun’s audit of Shengtong Group’s issuance of corporate bonds,which can be summarized as follows:(1)certified public accountants are not diligent and responsible in the audit process.Ignoring industry characteristics and risk factors,not focusing on financial risks related to solvency,flawed assessment of the effectiveness of internal control,unreasonable arrangement and incomplete implementation of audit procedures for the issuance of corporate bonds.(2)The integrated management of Zhongtianyun Firm is insufficient,and the quality control is flawed.The branch has high independence,weak management awareness,and the audit review system is a mere formality.(3)The audit practice environment of issuing corporate bonds is not good.It is mainly reflected in the long audit cycle and complex project relations,involving the interests of a variety of intermediaries,the insufficient demand of audited units for high-quality audit,the fierce competition in the audit industry leading to the lack of voice of auditors,and some regulations of regulators on the audit of issuing corporate bonds are not clear.The fifth part draws the Enlightenment of avoiding the audit failure of issuing corporate bonds from the three levels of certified public accountants,accounting firms and regulators.First of all,certified public accountants should be diligent and responsible,maintain professional skepticism,especially pay attention to the industry characteristics and risk factors of the issuer’s industry,and pay attention to the financial risks related to solvency.In the audit process,we should pay attention to the effectiveness of the internal control of the audited unit,rationally arrange the audit procedures and implementation,pay full attention to important audit matters,and timely discover and deal with audit anomalies to ensure audit quality.Secondly,accounting firms should build an integrated quality control model,strengthen the control of the head office over the branches,implement unified standards in business implementation,improve the audit review mechanism and ensure the effective implementation of the review mechanism through the system,and suggest an audit quality oriented salary management system.Finally,regulators should strengthen the supervision of corporate bond issuance projects,improve the information disclosure system,clarify the specific methods and risk assessment standards of audit,strengthen the supervision and punishment of intermediaries,improve the effectiveness and operability of supervision,and reduce the possibility of intermediaries forming a community of interests with bond issuers because of their own interests.At the same time,we can change the appointment mode of intermediaries,improve the voice of the audit industry,promote high-quality competition in the market,promote industry self-discipline and standardization,and ensure audit quality.The sixth part is the conclusion,which summarizes the main contents of the full text,explains the limitations of the article,and looks forward to the standardization of the bond market environment.