Case Analysis of Audit Failure of Accounting Firms — Taking the Audit of Bobaolon by Zhongxingcai Guanghua as an Example

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Economic Management Journal

Economic Management Journal (EMJ) is an international open access journal, concerning about the latest research results of economic management. The goal of the journal is to provide a global forum for scholars and researchers in this field to exchange ideas and promote the theoretical and practical development of economic management.The journal receives manuscripts written in Chinese or English. As for Chinese papers, the following it... [More] Economic Management Journal (EMJ) is an international open access journal, concerning about the latest research results of economic management. The goal of the journal is to provide a global forum for scholars and researchers in this field to exchange ideas and promote the theoretical and practical development of economic management.

The journal receives manuscripts written in Chinese or English. As for Chinese papers, the following items in English are indispensible parts of the paper: paper title, author(s), author(s)'affiliation(s),abstract and keywords. If this is the first time you contribute an article to the journal, please format your manuscript as per the sample paper and then submit it into the online submission system. Accepted papers will immediately appear online followed by printed hard copies by Ivy Publisher globally. Therefore, the contributions should not be related to secret. The author takes sole responsibility for his views.

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ISSN Online:2169-6039

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Case Analysis of Audit Failure of Accounting Firms — Taking the Audit of Bobaolon by Zhongxingcai Guanghua as an Example

Full Text(PDF, 288KB)

Author: Ting Li, Tian Xiao

Abstract: In recent years, the supervision of the China Securities Regulatory Commission has been continuously strengthened, and the phenomenon of financial fraud of listed companies is still common, which makes it difficult for the public to trust the audit report issued by certified public accountants. This paper analyzes the reasons for the failure of Zhongxingcai Guanghua's audit of Bobaolon from the three levels of audit subject, audit object and external supervision, and puts forward suggestions to prevent audit failure. At the level of audit subject, the lack of quality control function, the out of control of correspondence procedure and the lack of vigilance are the main factors causing audit failure. At the level of audit object, the imperfect internal governance structure of the enterprise itself brings higher audit risk, which further increases the possibility of audit failure. At the external regulatory level, factors such as insufficient regulatory coverage, lagging supervision, and low penalties have led to a fluke mentality between enterprises and accounting firms, and the risk of audit failure has increased. Based on this, accounting firms should carry out integrated management, improve and strictly implement quality management procedures, and improve their practice ability. Listed companies must improve their corporate governance structure. External regulators need to set a good listing threshold, use new technologies to improve regulatory agility, and increase the cost of illegal violations, in order to reduce audit failure events.

Keywords: Zhongxingcai Guanghua, Bobaolon, Audit Failure

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