(A) the lack of audit independence
In recent years, accounting fraud has been exposed by the media in domestic and foreign firms, and all walks of life have begun to pay close attention to audit independence, and have doubts about the independence of certified public accountants. There are several reasons for the lack of audit independence:
1, excessive government intervention in the audit market. At present, most of China's accounting firms are limited liability companies restructured from decoupling. On the one hand, excessive government intervention makes it difficult for the audit of certified public accountants to be independent and fair; On the other hand, certified public accountants or accounting firms expect to rely on the power of relevant institutions and government officials to divide the independent audit market. Therefore, certified public accountants may succumb to the pressure of the power subject and no longer maintain their independence.
2. The laws and regulations are not perfect, the punishment is ineffective and the violation cost is low. Because China is in the period of economic transformation, although some relevant laws and regulations have been promulgated, they are still not perfect, and the business activities of enterprises are not standardized. For example, enterprises have the intention and behavior of whitewashing their financial status and operating results, some enterprise managers lack minimum honesty and credibility, and even bribe auditors, which makes them lose their independence. In addition, China's external supervision of accounting firms is weak, the penalties for violations are weak, and the overall risk level of auditing is low. Under the guidance of economic interests, certified public accountants finally choose to work with enterprises.
3. Audit pricing is not standardized. The audit fees of accounting firms are not standardized, and the consequence of unfair price competition between accounting firms is that the audit fees are getting lower and lower. In order to gain profits, we have to reduce sufficient and even necessary audit procedures, which leads to the decline of audit quality.
(B) Contradictions of relevant legal provisions on certified public accountants
The Criminal Law, the Certified Public Accountant Law, the Securities Law and the Company Law all involve provisions related to the legal liability of certified public accountants, which play an important role in maintaining the market operation order. However, due to the change of external environment and the different legislative order, there are many contradictions in the provisions concerning the legal responsibility of certified public accountants in these existing laws. This leads to the inconsistency and imbalance in the scale of investigating the legal responsibility of certified public accountants; It complicates the legal problems of certified public accountants, and when certified public accountants encounter legal litigation problems, they evade their legal responsibilities according to the gaps in these legal provisions, which also increases the audit risk invisibly.
(3) The internal control of the audited entity is limited.
At present, there are a large number of small-scale enterprises in society, with small assets, simple business operations, simple accounting records and limited internal control. There is the possibility that the management may override the internal control, and the operational risks and the probability of major misstatement risks they face are greater than those of ordinary large enterprises. Under the dual pressure of leadership authority and interests, many accountants often waver between honesty and dishonesty, and fall into a moral dilemma, which will inevitably increase the risk of auditing.
(4) Competency and professionalism of certified public accountants
At present, many people who work in accounting firms do not have the qualifications of certified public accountants, and their professional knowledge and professional skills are lacking to some extent. When auditing, they may not be able to find out all kinds of defaults of the audited units. Moreover, some certified public accountants do not pay attention to investigation and research in their practice, and often judge by their own subjective wishes, which greatly improves the audit risk.
(E) Audit quality control standards are not implemented in place.
The basic standards of audit quality control promulgated and implemented in China are an important part of the professional norms of certified public accountants, and are the basic standards to ensure the quality of audit work and standardize audit behavior. If the firm fails to seriously implement the Basic Standards for Quality Control of Certified Public Accountants in China, it will inevitably lead to confusion in the internal control system of accounting firms, improper preparation of audit plans of accounting firms, serious mistakes and omissions in audit field work, audit evidence collection, preparation and review of audit working papers, and the audit risk will inevitably increase.
(6) The employment system of accounting firms is distorted.
In addition to the international "Big Four", most domestic firms choose interns when recruiting employees, which is not only to save costs, but also to reduce the workload during the busy season of the firm. However, interns will have insufficient practical experience when auditing in the field. If the CPA of the firm does not do everything personally, it will also have a great impact on the audit quality.
Second, the countermeasures to prevent audit risks
(A) to build the brand of the firm
There is a brand gap between China and the developed countries in the world, and the brand gap of accounting firms is even more obvious. The internationally famous "Big Four" accounting companies not only dominate the international accounting market, but also occupy a considerable share in China's accounting market. The "Big Four" brands have played a decisive role in this. The core competitiveness of accounting firms comes from the construction of their own brands, and the key to forming brand value lies in audit quality. Quality is the foundation of the brand, social awareness is the result of brand development, and the improvement of social awareness promotes the improvement of business income. Only when the business income is improved can sufficient resources be invested to promote the improvement and scale of audit quality and the development of a virtuous circle of the firm.
1, establish a harmonious culture of the firm. The corporate culture of an accounting firm should be a set of business ideas, professional beliefs, values and behavior rules formed by managers and all employees in their long-term practice activities, which are suitable for their own characteristics and development laws, as well as the group behavior patterns formed therefrom. The corporate culture of accounting firms aims at establishing correct professional concepts and good spiritual customs, unifying and standardizing the values of the staff of the firm, and unifying and standardizing the behavior of all staff by establishing and perfecting various rules and regulations, operating procedures and working standards of the firm.
2. Improve the service level of the firm. Facing the development of modern social and economic situation, the firm should expand the connotation of products from the final report to the process of various services, which is reflected in the whole process before the report is formed, and provide financial guidance, authentication or consulting services behind the customer report to improve customer satisfaction.
3. Actively introduce and retain the talents of the firm. Certified public accountants who have mastered a lot of professional knowledge and skills are the foundation for the survival and development of accounting firms. When introducing employees, we should break this single source of personnel and actively introduce professionals such as law, English, computer and management to facilitate the diversified development of accounting firms' business. In particular, comprehensive talents with profound knowledge of accounting and auditing as well as other professional knowledge should be introduced, which can not only improve and optimize the composition of the firm's practitioners and improve the quality of the firm's personnel, but also provide professional advice for various types of enterprises and businesses of the firm, thus improving the quality of the audit. Non-certified public accountants who have been recruited into the firm should take the initiative to become reserve talents of the firm and improve their professional level, so as to ensure a certain degree of avoidance of audit risks.
(B) to expand the size of the firm, to achieve bigger and stronger.
After China Institute of Certified Public Accountants issued "Opinions of China Institute of Certified Public Accountants on Promoting the Firmness and Enlargement of Accounting Firms (Draft for Comment)", China's accounting firms once again set off a wave of scale. Only by truly becoming bigger and stronger and letting the public recognize the competition and value of big firms can we improve the audit quality and reduce the audit risk.
1, adhere to professional development, intensive management and integrated management. According to different majors, the development platform can be established. In addition to the audit and capital verification business clearly stipulated in the Law of Certified Public Accountants, other businesses such as asset appraisal and tax services can also be developed. The internal institutions of the firm should do a good job of coordination and cooperation, with one industry as the mainstay and diversified operations, which can not only improve the utilization rate of human resources in the firm, but also greatly save the management cost of the firm.
2. Standardize audit fees and improve audit quality. Standardizing audit fees is of great significance to maintaining fair competition, improving audit quality and maintaining the independence of certified public accountants. According to the relevant research results, there is a positive correlation between audit fees and audit quality, that is, the higher the quality of audit services provided by accounting firms, the higher the audit fees they charge, and vice versa. We should set up an audit fee supervision Committee to collect audit fees reasonably and improve the supervision of audit fees.
3. Improve laws and regulations and reshape accounting integrity. First, the regulations of trade associations. All firms should abide by the regulations issued by the Institute of Certified Public Accountants, and the Institute of Certified Public Accountants should take the lead in standardizing the professional ethics of certified public accountants, improving their professional ethics and maintaining their professional image. The second is administrative regulations. The legislature should formulate laws and regulations as strict as the Sarbanes-Oxley Act passed by the United States Congress, increase penalties for violations, strengthen supervision, improve the punishment mechanism, raise the cost of punishment, and standardize the legal responsibilities of certified public accountants. Only by clarifying the legal responsibilities of certified public accountants can we enhance their risk awareness, practice in good faith and improve the quality of auditing.
4. Establish and improve the internal control system and risk responsibility system. (1) implements the quality veto, that is, the CPA project verification signature responsibility system and the chief auditor's check veto system. Starting from the factors that affect the quality and risk, various methods are adopted to regularly assess and reward and punish the layers of audit quality control. (2) Professional grouping. There are many reasons for the emergence of audit risks, because auditors don't understand the production and operation of the entrusted units and industries, so it is necessary to implement professional grouping. At the same time, some large projects implement the professional integration of audit teams, that is, taking into account the comprehensive use of economic, technical, legal and other professionals, which is conducive to curbing risks. (3) Establish a review system for reports and audit working papers.
5. Improve the competence and professional caution of certified public accountants. According to American GAAS, due professional auditing requires certified public accountants to maintain a reasonable professional skepticism. Therefore, certified public accountants should adhere to the position of honesty and integrity, diligently collect and objectively evaluate audit evidence, and certified public accountants should not be satisfied with obtaining audit evidence that is not completely convincing because they trust the honesty of the management of the audited entity. Maintaining a high degree of professional prudence can help certified public accountants to find problems keenly, catch the clues of fraud in the audited units, improve audit efficiency, and make audit work get twice the result with half the effort. On the contrary, Ernst & Young and the fallen Andersen are both a profound lesson.
6. Maintain sensitivity to the audit environment. Knowing the customers and all aspects related to audit matters is an important job to find risks and avoid legal proceedings. Before the implementation of the audit, we should understand the following environmental matters and keep sensitive: (1) Have a deep understanding of the financial and economic situation of the whole region, especially its changing and developing trends; (2) The influence and degree of existing policies and regulations on the operation and management of customers; (3) Internal changes and external flows of the legal representative of the customer and its main management personnel; (4) Customer's internal control system is sound, and what accounting system is adopted; (5) The established auditing professional standards and their application status; (6) The development trend of the mastered audit knowledge and related technologies.
7. Establish the industry expertise of accounting firms. Ernst & Young has significant industry expertise advantages in automobile and computer industries, KPMG in banking and insurance, PwC in computer, minerals, communications and PricewaterhouseCoopers in communications. AICPA( 1998) points out that industry expertise is one of the key factors affecting the future development of CPA. Because from the perspective of competitive strategy, the firm's development of industry expertise is the inevitable result of adopting differentiation strategy in order to adapt to the fierce competition in the audit market. If a firm can distinguish its audit service from its competitors and attract customers and get recognition, then it will get the premium of audit fees and gain competitive advantage.
In short, risks always exist, and there are many reasons. The preventive measures proposed in this paper are not comprehensive, but as long as we treat, control and prevent them carefully, we can expect to eliminate or reduce audit risks, so as to avoid and prevent audit risks successfully.