Research On The Causes And Countermeasures Of Audit Failure Caused By Improper Bank Confirmation

The confirmation procedure refers to the external confirmation,relates to the process in which the certified public accountant obtains the written reply directly from the third party(the person questioned)as the audit evidence.The written reply can be in the form of paper,electronic or other media.The application of the confirmation procedure enables certified public accountants to directly obtain external evidence in the audit process,provide relevant and reliable audit evidence for the identification of different accounts and transactions,and effectively deal with the risk of fraud.It is of great significance to the integrity and accuracy of financial information disclosure and the rationality of audit opinion issuance.Therefore,the reasonable and effective implementation of the confirmation process will affect the authenticity and reliability of the audit evidence,and then affect the appropriateness of the audit opinion and even the success or failure of the audit.In the recent years,the implementation of the registration system and the implementation of the new "Securities Law" have further strengthened the regulatory concept with information disclosure as the core.However,cases of audit failures due to improper confirmation and other relevant issues have occurred frequently.For instance,Kanime Pharmaceutical forged or altered large amount deposit certificate and bank statements in 2019 involves in monetary funds fraud.Furthermore,it arises our attention that a relatively high proportion of audit failures due to monetary funds is related to bank confirmation.Therefore,this paper analyzes and summarizes the reasons that lead to the failure of bank confirmation procedure by studying the problems existing in the process of bank confirmation among accounting firms.And make advice on improving the quality of confirmation auditing,which is crucial for improving service ability and quality of CPA industry.This paper approaches to the problem that exists to bank confirmation by literature research and statistical analysis and questionnaire survey.On the one hand,this paper makes an analysis on the administrative penalty decision of the China Securities Regulatory Commission against accounting firms from 2001 to 2022.On the other hand,analysis the reasons why bank confirmation fails by considering the problems that auditors face in real work.Moreover,comprehensively consider the specific goals and principles of the implementation of confirmation procedure and the status of confirmation digitalization put forward corresponding improvement suggestions which specifically aim to solve the main problems that accounting firms,the third parties and audited entities come up with in reality based on the position of the accounting firms in order to provide guidance and help for auditors to implement the confirmation audit procedure to a certain extent,and as a result,play a role in standardizing confirmation process and improving the weight of confirmation proof in supporting the effectiveness of audit results.In summary,this paper believes that from the perspective of accounting firms,the problems existing in confirmation auditing process can be solved to a certation extent and the quality of financial information disclosure can be improved by establishing a standardized internal control system,improving the competence of certified public accountants to strengthen the control of the confirmation process,speeding up the construction of the confirmation information process,and enhancing the communication with audited entity and regulatory agencies.