How to improve the auditing standards and auditing system

Auditing standards are principles that summarize cases that are recognized as fair and sound in auditing practice. Even though they are not legally mandatory, auditors must comply with them when engaging in auditing. Usually, we classify auditing standards into three categories, namely, government auditing, internal auditing, and private auditing. Government auditing standards are standards for monitoring the government auditing process, internal auditing standards are standards for monitoring the behavior of internal auditing, and private auditing standards are standards for measuring and monitoring the behavior of private auditing process. Although the objectives they regulate are different, there are similarities among the three, so there is an inextricable relationship between the various auditing standards.1.1 Background and significance of the study1.1.1 Background of the thesis study The phenomenon of transforming accounting firms has frequently appeared in the auditing of accounting statements in recent years. Especially in the securities market, there is a possibility of "firing" or "taking over", or even the phenomenon of changing accounting firms several times during the year of agreement for an audit of accounting statements. This is due to the lack of communication between the former CPA and the subsequent CPA, which can easily lead to an increase in audit risk and also have a negative impact on society.Since the 1990s, the CPA profession has entered a period of rapid standardization and development in China. The establishment of the main system of independent auditing standards was marked by the establishment of CPA firms in the early 1980s as well as auditor services in the mid-1980s. The establishment of CPA firms was in line with the needs of the economic system reform and the historical trend in the context of reform and opening up. In China, since these two types of firms are usually established by government departments or administrative units, and are generally attached to certain administrative units or departments, it is difficult to define "independent auditing", and they are usually called "social auditing".1.1.2 Significance of the research paper Significance The formulation and implementation of auditing standards provides a theoretical basis for the standardization of auditing work, helps to realize the standardization of auditing work, is conducive to the fair measurement and evaluation of the quality of auditing work, and thus improves the support and trust of the community at large in the auditing business. By formulating and implementing the auditing standards, it helps to avoid the occurrence of unfair complaints or accusations, effectively protects the rights and interests of the auditing department or personnel, helps to cultivate talents and promote the research process of auditing theory, and lays the foundation for the smooth development of reform and opening up and the flourishing of auditing career.1.2 Content of the thesis This thesis comprehensively applies the latest achievements of various disciplines to elaborate the background of the research on the improvement of the system of auditing standards, the background of the study, the background of the study, the background of the study, the background of the study, the background of the study and the background of the study. This thesis comprehensively applies the latest achievements in various disciplines to elaborate the research background and significance of the improvement of China's auditing standards system, and introduces and analyzes the current situation of China's auditing standards system. It also puts forward suggestions for the improvement of China's auditing standards system through case studies at home and abroad. Chapter 2: Development of China's Auditing Standards and Existing Problems 2.1 The development of China's auditing standards has experienced 30 years of ups and downs. After the restoration of CPAs in China in the 1980s, and with the opening of the securities market in December 1990 and April 1991 in Shenzhen and Shanghai, China has paid more and more attention to the auditing career of CPAs. Since there were no independent auditing standards to guide CPAs in the early days of the securities market, there were many auditing behaviors that violated the rules and regulations, such as the influential cases of "Yuan Ye", "Qiong Minyuan", "Hongguang For example, the highly influential incidents of "Yuan Ye", "Qiong Minyuan", "Hongguang", "Yin Guangxia", "Ke Long", etc., which brought great adverse impact to the CPA profession in China, and negatively affected the market and the society, but this situation also prompted the formation and advancement of the independent auditing standards: and the development of independent auditing standards in 1996. However, this situation also prompted the formation and advancement of independent auditing standards: on January 1, 1996, the Ministry of Finance of China promulgated the first Independent Auditing Standards on December 26, 1995, which came into force; in April 2003, the Audit Reporting Standards were revised and implemented on July 1, 2003; on February 15, 2006, the Auditing Standards for Chinese Certified Public Accountants were promulgated and came into force on January 1 of the next year.1 2.1.1 The first Independent Auditing Standards were promulgated on January 1, 2006, which came into force on January 1 of the following year. 2.1.1 Generation of the first Independent Auditing Standards The Shenzhen "Yuan Ye" case occurred in 1992, and it was the first case in which the government of China pursued the administrative responsibility of CPAs, and it was known as the first major auditing case of a listed company in China. The full name of the company was Shenzhen Yuan Ye Industry Co., Ltd. which was a sino-foreign joint venture listed company and one of the first five enterprises listed on the Shenzhen Stock Exchange, which was so prosperous that it was sought after as the "King of Shares" in the industry for a short period of time. During the period of its establishment and development, the company violated a number of rules and regulations, but the accounting firms that carried out capital verification and auditing work for the company issued and passed 76 capital verification reports and audit reports during the five-year period from the establishment of the national regulations in 1987 to 1991. The CPAs, as the "economic police" of the society, did not raise any objection to the existence of the major crimes of the company, and helped the senior staff of the company to take the state property for themselves, which had a very unfavorable social influence on the public. The relevant departments and personnel involved in the case were penalized by the Guangdong Provincial Department of Finance. After this case, the China Securities Regulatory Commission (CSRC) was formally established in November of the same year, and the Ministry of Finance (MOF) promulgated the "Accounting System for Pilot Joint-Stock Enterprises" and the "Rules for Checking Accounts" accordingly. The above cases revealed that there are many problems in the CPA profession in China, and it can be seen that whether or not there are auditing standards is directly related to whether or not the auditing profession can move forward in a healthy and stable manner. After the occurrence of these cases, and after a lot of efforts, the Ministry of Finance finally promulgated the first "Independent Audit Standards" on December 26, 1995, which changed the auditing of financial statements by CPAs from "checking accounts" to "auditing". 2. 2.1.2 Revision and Adjustment of the Second Independent Auditing Standards In 1996, another financial fraud case that shocked the whole country surfaced, in which the China Accounting Firm (Hainan Branch), which was affiliated with the Ministry of Finance, issued a false audit report on the Great Wall International Investment Group (hereinafter referred to as Hainan "Qiongmin") due to a false income of about 5 million dollars. (hereinafter referred to as Hainan "Qiongmin") issued a false audit report, false income of about 566 million yuan, the impact on the Shenzhen stock market of about 2.8 billion yuan, due to the source of the "This CSRC will be this incident defined as a "serious misrepresentation of the behavior of the" 9. "Qiongminyuan" incident has become the first case of The "Qiongminyuan" case became the first case of administrative prosecution of a CPA after the establishment of the CSRC, and the first case of "falsification" in the Chinese securities market. It also became the first "forgery case" in China's securities market to be subject to criminal prosecution. The above case revealed the shortcomings of the firm affiliation system and the negative impact of unsound auditing standards on auditing work, and in this way pushed forward the "three-clean and one-change" system of CPAs from 1997 to 1999 and the "three-clean and one-change" system from 2000 to 2011. From 1997 to 1999, the "three clean-ups and one reform" system of CPAs was promoted, and since 2000, there have been 18 nationwide institutional reforms of CPA firms; from 1999 to 2003, the "Specific Standards for Independent Auditing" were revised and formulated. During this period, a number of cases marking the maturity of China's CPA auditing profession have emerged: in 1997, Shenzhen Zhonghua CPAs provided annual auditing services for "Su Sanshan" firms, and the non-standard audit opinion issued due to the inability to recognize its income was characterized as the first case; in 1997, Chongqing CPAs provided annual auditing services for "Su Sanshan" firms, and the non-standard audit opinion was characterized as the first case. In 1997, Chongqing CPA Firm provided annual audit service for "Yu Titanium White", because of the serious discrepancy between the accrued interest of 80.64 million yuan and the under-accrued interest expense of 7.43 million yuan, the audit report issued became the first case of negative audit report in China; in 1997, Puhua Dahua CPA Firm provided annual audit service for "Jewel Electronics". In 1997, Puhua Dahua CPAs provided annual statement auditing service for "Jewel Electronics", and since it was impossible to properly assess whether the company's inventory costing was reasonable, the auditor's report issued by the company became the first case of audit report with no expressed opinion in China. The above auditing cases signify that the awareness of social responsibility of CPAs in China has gradually increased, and that the auditing profession of CPAs in China has a certain degree of independence, which is of positive significance to the revision and improvement of the Independent Auditing Standards (IAAS).2.1.3 Issuance of the Second IAAS In April 1996, Zheng Baiyi, who was once famously known as "a red flag of the reform of State-owned Enterprises", issued an audit report that became China's first audit report with an unqualified opinion. In April 1996, Zheng Baiwen, which was once famously called "a red flag of state-owned enterprise reform" in China, became the first listed company in Henan Province and the first listed company in Zhengzhou City. According to statistics, the enterprise ranked first in Shanghai and Shenzhen in terms of return on assets and scale of operation. But the good times don't last long, in 1998 and 1999 two years of loss per share respectively 2.54 yuan, 4.844 yuan of Zheng Baiwen, hit the year's most, bank debt *** totaled 2.5 billion yuan. Therefore, the boutique China Securities Regulatory Commission (CSRC) launched an in-depth investigation into the company and found that there were a series of irregularities within the company, such as false listing and publication of false information on the listing, etc. In 2001, the CSRC decided to carry out the relevant administrative penalties on Zheng Baiwen and the personnel involved in the case, and at the same time, it also penalized the Zhengzhou Accounting Firm, which had issued the 1997 annual auditing report for the company, with the relevant responsibility (already canceled), and announced it to the public. This incident had a significant impact on China's securities market. This incident has a significant impact on China's securities market, the China Securities Regulatory Commission for the first time on the independent directors of the law, making the regulator soberly recognized as independent directors Fully demonstrated the significance of in-depth communication between certified public accountants and independent directors. The strong sense of responsibility that "Yinguangxia" should have, the financial fraud case of "Yinguangxia" surfaced in August 2001, and the Ministry of Finance decided to revoke the decision of providing auditing services for the company in 2002, after investigation by the relevant departments, and the Ministry of Finance decided to revoke the decision of providing auditing services for the company in 2002, after investigating the existence of false profit reporting in the annual financial report. The Ministry of Finance decided in 2002 to revoke the audit service for the company that had reported false profits in its annual financial reports. In 2002, the Ministry of Finance decided to revoke the CPA firm that had provided auditing services for the company - Zhongtianqin CPA Firm - and, at the same time, the judicial department also carried out criminal prosecution of the signatory CPAs.6 After the incident of "Yinguangxia," many investors lost a lot of money. After the "Yin Guang Xia" incident, which formed the beginning of the court's acceptance of investment loss cases due to "misrepresentation", the CICPA started to conduct a comprehensive introspection of auditing standards, and decided to learn from international auditing standards in a painful way. After the emergence of the case, the CICPA started to reflect on the auditing standards and decided to learn from the international auditing standards. Later, the Securities and Futures Commission (SFC) investigated Kelong Electric for violating securities regulations by reporting a huge loss of 60 million dollars in its annual statement on April 19, 2004, and in August 2005, it was found that Kelong Electric's disclosed financial report was seriously inconsistent with the facts. On July 4 of the following year, the CSRC penalized Kelong and the relevant personnel in accordance with the law.8 After the Kelong incident, the CSRC opened an investigation into Deloitte & Touche, which had audited Kelong's financial statements for the period 2002-2004, and found that a large number of auditing procedures were insufficient, inappropriate, and did not detect any material errors in Kelong's cash flow statement. The CSRC investigated Deloitte & Touche in accordance with the law. China Securities Regulatory Commission (CSRC) held a hearing on the administrative penalty against Deloitte & Touche, but has not been able to make the actual penalty. Deloitte & Touche, as one of the international "Big Four" accounting firms, its ability in the professional aspects of the "Deloitte & Touche" claims become unquestionable, fully capable of discovering the existence of the problems of Kelong, but again and again condoned. China's shortest litigation time of the misrepresentation case. After the CPA profession experienced the significant impact of various illegal cases, the relevant governmental agencies as well as the auditing profession conducted a new reflection on the CPA auditing system and auditing standards. Finally, on February 15, 2006, the Ministry of Finance held a conference in Beijing on the auditing standards system,*** and 48 CPA auditing standards were issued. It is even more noteworthy that in this conference, the "Auditing Standards for Certified Public Accountants", which fully reflects the auditing standards in China, was renamed as "Professional Standards for Certified Public Accountants", and the boutique department endeavored to be closer to the International Standards on Auditing. The above shows that the occurrence of major auditing irregularities has both advantages and disadvantages, and that the formation of independent auditing standards for CPAs is the product of irregularities, which is the authority of CPAs in the auditing business and the norms that must be observed by CPAs in their careers.10 The formation and development of independent auditing standards is a key factor in the development of the independent auditing standards among people from all walks of life, and the development of the independent auditing standards is a key factor in the development of the independent auditing standards in China. The formation and development of independent auditing standards is a product of the game of interests between people from all walks of life, and the development of independent auditing standards has improved the professional conduct of certified public accountants and ensured that audits are carried out in a fair and equitable manner. However, due to the late development of China's capital market compared with the West, the regulatory mechanism is not mature enough, it is inevitable that there are still some deficiencies in the independent auditing standards for certified public accountants, which requires us not only to learn from the experience of developed countries in the West but also to combine with the actual situation of the country, in particular, we should seriously deal with each case of violation, learn from the experience of the West, learn to learn by example, and find out the substantive problems through the problems. 2.2 Problems of the Auditing System in China at the Present Stage Problems in the system 2.2.1 Problems in the State Audit With the development of the socialist democratization process in China, there are more and more people who have devoted themselves to supervising the work of the government. As a basic right of citizens, taxpayers enjoy the right to know where the government spends the public's money.6 Joseph Eugene Stiglitz argues that the government is the creator, controller, and owner of public *** information, and that the amount of public *** information available to the public basically depends on the amount of information that the government is willing to provide.7 As shown through the practice of various countries, government auditing plays a role in breaking the current pattern plays an important influential role in supervision. In summary, it can be argued that the transparency of government auditing is an important way for people to be able to participate in and understand the progress of government auditing work. In recent years, with the reform of the administrative system, a large number of unclassified government affairs have been made public, and the public has felt the results of the mechanism reform. At the same time, although China's audit disclosure system has developed significantly, there are still a lot of shortcomings, such as irregular approval procedures, unclear content of announcements, and non-transparent audit process, which greatly impede the development of the audit disclosure function.4 Obviously, such transparency of government auditing does not meet the public's expectations.4 2.2 Problems of Internal Auditing China's internal auditing started relatively late, and there are inevitable uneven distribution of internal auditing in China. China's late start in internal auditing has inevitably led to the phenomenon of uneven distribution. Although internal auditing is distributed in large government agencies, state-owned enterprises and public institutions, there are still blind spots in some small and medium-sized enterprises.