Based On The Conflict Theory Dahua’s Case Study On The Audit Failure Of ORED

Since the 21 st century,China’s economic operation mechanism has been in an important period of transition from a planned economy to a market economy.The Chinese economic market is constantly changing,the capital market is not mature enough,and the audit industry is developing rapidly.The failure of relevant mechanisms and rules to keep up has led to an endless number of audit failures.In recent years,there have been frequent occurrences of financial fraud in China’s securities market,and the China Securities Regulatory Commission has continuously increased its efforts to investigate and punish financial fraud in listed companies.Although the Chinese government has introduced a series of policies and regulations to regulate and address the issue of financial fraud in listed companies,due to the immature development of China’s capital market and incomplete legal system,these policies and regulations have a very limited regulatory effect on the certified public accountants and audit market.In this context,a large number of financial fraud incidents continue to occur,which also leads to investors questioning the professional competence of auditors,seriously affecting their professional image.At the same time,due to the imperfect internal control system of the company and the uncoordinated relationship between the internal audit department and external audit institutions,there are a large number of audit failures in China’s securities market.In addition,due to the lack of independence and professional ability of accounting firms,their audit reports lack credibility.In order to avoid serious consequences for society caused by these issues,it is necessary to strengthen the management of audit failures at the macro level,and improve the professional level and professional ethics of auditors at the micro level.This article analyzes the factors that affect the professional competence of certified public accountants through the audit conflict model to provide relevant suggestions,avoiding audit failure from the source.This paper uses the audit conflict theory based on the audit conflict model to study from the typical and representative case of Dahua Certified Public Accountants’ failure to audit ORED Optoelectronics Co.,Ltd.,to fully study the conflict between the auditor and the management in the audit process,and to deeply analyze the conflict between the two auditors in the audit process and the causes of audit failure.Firstly,the existing literature is deeply studied,and the relevant concepts and theories of audit failure and audit conflict theory are sorted out;Optimize the audit conflict model,and then analyze the reasons for audit failure through the audit process of Dahua Certified Public Accountants’ audit of ORED.The optimized audit conflict model is used to consider the possibility of ORED’s pressure,the possibility of Dahua Certified Public Accountants’ resisting ORED’s pressure,and the punishment of the CSRC’s investigation of audit projects,so as to make a specific analysis of the driving force of ORED’s implementation of financial fraud,the driving force of Dahua’s implementation of normal audit procedure,the constraints of ORED’s implementation of financial fraud,and the constraints of Dahua’s implementation of normal audit procedure,Provide support for the analysis of audit failure cases in ORED.Using the model to analyze Dahua’s audit failure,it was found that the audit failure is due to the imbalance of power between the audit subject and object,namely the auditor and the management authority.Therefore,after the failed audit event,further improving China’s registered accountant audit system,strengthening auditors’ professional abilities,and improving audit quality have become urgent issues that need to be addressed.This article proposes to enhance the driving force of the accounting firm itself and enhance the auditor’s ability to withstand pressure,and proposes that the China Securities Regulatory Commission strengthen its supervision of auditors and accounting firms to avoid audit failures.