Research On Common Features Of Audit Failure Of Accounting Firms

With the vigorous development of China’s capital market in recent years,auditing has become one of the important roles in ensuring the stable operation of market economic activities.Audit failure not only damages the reputation of accounting firms and certified public accountants(CPAs),but also affects the development of the audit industry and disrupts the stable operation of the capital market.Therefore,preventing audit failures is particularly important for accounting firms and the China Securities Regulatory Commission(CSRC).Taking the most representative CSRC penalty announcements among external regulators as the research object,this article analyzes the penalty announcements and studies the common characteristics of audit failures in order to achieve the purpose of preventing audit failures and improving audit quality.Therefore,The research in this article has important theoretical and practical significance.This article takes the auditors and their audit clients in the CSRC’s audit failure penalty announcement as the research objects,and uses descriptive statistics with comparative research methods to obtain the common characteristics of audit failures from the perspective of auditors and audit clients,to reveal what kind of auditors and its audit clients are more susceptible to strict supervision by the CSRC.On this basis,this article explores the reasons for the common characteristics of audit failures,and summarizes the issues related to the responsible party for audit failures.From the perspective of auditors and external supervision,with the help of the law of common characteristics,it provides countermeasures and suggestions to prevent audit failures to all parties.According to the common characteristics of statistics,it is found that:(1)The accounting firm ranks 11-20,the lower the audit fee and the shorter the audit term,the more likely it is that audit failures will occur,and continuous audit failures are prone to occur.(2)The CPA is a male and a combination of two males,aged between 31-40,college degree,and 11-15 years after obtaining the CPA certificate,the audit failure is more likely to occur,and there is a contagious effect and contagion time is fast.(3)Listed companies are agriculture,forestry,animal husbandry and fishery,and are located in moderately developed areas that are more prone to audit failures.Listed companies are more likely to fail the audit if their operating revenues are between 100 million yuan and 1 billion yuan and net profits are between 10 million yuan and 50 million yuan in the year before the audit failure occurs.Within 2 years of listing,and when the chairman and general manager are concurrently appointed,listed companies are more prone to audit failures.Reasons for the common characteristics of audit failure include the lack of accounting firms in the management of internal quality and the impact of characteristic differences.External regulators failed to strengthen audit supervision in a targeted manner.The audit industry has not formed a good market competition environment.The internal control or internal governance of the audit client is relatively weak.Based on the above common characteristics of audit failures and analysis of their causes,this paper provides countermeasures and suggestions to prevent audit failures from the perspective of auditors and external supervision.