Exploring effective ways to improve quality of audits
Audit quality factors, institutional factors affecting factors Summary non-technical factors: national and international cases of the continuous disclosure of financial scandals, the independent audit process and results of quality problems are also becoming more attention from all sectors of society, affecting the CPA an important factor in the survival and development. Therefore, there are many factors that affect the quality of audits to be a systematic analysis and actively explore effective ways to improve audit quality and measures of Chinaundefined Therefore, there are many factors that affect the quality of audits to be a systematic analysis and actively explore effective ways to improve audit quality and measures of ChinaAudit quality factors, institutional factors affecting factors Summary non-technical factors: national and international cases of the continuous disclosure of financial scandals, the independent audit process and results of quality problems are also becoming more attention from all sectors of society, affecting the CPA an important factor in the survival and development.undefinedundefined Therefore, there are many factors that affect the quality of audits to be a systematic analysis and actively explore effective ways to improve audit quality and measures of China
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1. the client's integrity. Overall, the integrity of the client, provides information on the financial statements of the credibility of a relatively high level, the CPA audit practice can be effective in reducing the risk to the community is acceptable to social expectations. By contrast, customers, tortuous, its financial statements, there is an error or fraud more likely. If the client's integrity, either deliberately conceals a huge black hole, CPA only after long-term cooperation and regular knowledge can be distinguished. Thus, both old and new clients, CPA is often a variety of channels through a comprehensive understanding of the client's situation, such as personal contact with the previous audit, and access to previous annual audit documents work, evidence of a lawyer's client, the depositary bank, the main customers, and so on.
2. Auditor liability. appropriate responsibility auditor can better promote the community level of investment in the amount of audit quality or auditor's effort level, but if the auditors to provide proper measure of damages caused by improper verification of judicial institutional arrangements appropriate, the statutory auditor bound by the duty would lead to excessive demands for more socially optimal behavior of investment. For if the legal responsibilities of the auditor is too heavy, the practice of auditors would be too conservative, although the audit report issued by high quality, but less than the optimum level required by the community, then the investment will result in less real was the best investment requirements. By contrast, if liability is too light of the auditor, auditors have to be radical is not a reliable guarantee for the issue of audit quality based on audit reports, so that the community needs more than an optimal level, which led the community at large over-investment behavior.
3. Governance structures and systems of internal control. International Auditing Standards and professional concerns of fraud management and fully reflects the corporate governance structure of audit quality. First, the separation of ownership and control over the extent and resolution mechanism. Focus on equity, then there is only risk of collusion or predatory interest of minority shareholders, the management of dispersed ownership, then there is moral hazard. Supported by the risk of material misstatement, equity approach easily lead to transactions between related parties are not just, like clearing and to protect the interests of Shell Transport resources, etc., of controlled easily dispersed ownership administration for personal gain. Company's shareholders, boards of directors and management of incentives and restrictive rules to deal with pre-existing risk of a direct impact on the effectiveness of the risks of material misstatement. Second, integrity management and risk attitude. Determine the integrity of the management company due to fraud resulting from the possibility of material misstatements in the financial report. If you face the risk management adopted a more aggressive attitude, then firms will tend to adopt aggressive policies and financial reporting accounting policies. The third is a system designed to prevent fraud. Fraud prevention system in the two dimensions of reporting financial impact, the level of corporate governance, the system for senior managers of the decision of the company's overall risk of errors (such as silver GUANGSHA, Enron) for high-risk companies (business risk or the assets of the invasion of risk of loss or asset) business system to prevent significant losses (such as Barings Bank, Singapore, China Aviation Oil, the French Societe Generale Bank of events .) Second, failure factors:
1. CPA Professional and professionalism. CPA professional care is defined as the process of certified public accountants, in practice we must be careful, its purpose is none other than the client's business economy and other issues challenging pretrial have been found in a variety of tracks , find the way of audit, especially the tracks customers disadvantages wrong place. Adequate and reasonable professional care, on the one hand, can help as much as possible to find a variety of CPA audit trail and audit progress, but it can help identify customers often see the mistakes of the CPA and fraud, while extraordinary items and are not familiar with the situation, responding positively to take special precautions to understand the latest developments in the areas of knowledge, learn new theories, techniques and methods to address new problems. 2. The quality of auditors weak risk awareness. In recent years, with the continued development of the field audit, the audit coverage is growing, more and more revisions of the project to complete the audit work under increasing pressure. Because fewer people and difficult tasks, some members of the audit staff, including some 1. Experience. audit staff quality is not great, can not meet the work requirements. Auditor knowledge structure perspective, the existing staff to understand the general financial audit of various masters of modern knowledge management, scientific and technological knowledge has a certain ability to perform a comprehensive analysis of relatively few compound talents, knowledge structure is relatively old and relatively simple, integrated response to complex audit is relatively weak. Second, the audit staff is relatively weak sense of exploration and innovation, the macro sense, but not strong enough sense of modern audit. Including some of the audit management institutions, at work, thinking about some of inertia is still relatively strong, the audit work to address the current situation is an inert material balance, but try too.
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2. CPA experience. If the audit team members have extensive practical experience, we can collect a certain amount of audit evidence, at the same time, to determine if customers take advantage of these accounting adjustments to accounting profit adjusted freely in order to reach those not sue, and practice in the absence of CPA audit staff are often made of wood from the trees, but only on the surface is not concrete, on the one hand lose a lot of audit costs, conversely easy to form the audit opinion wrong. It should be noted that regardless of how rich the experience CPA is not a substitute for appropriate audit procedures, we can not ignore professional care. Otherwise, once lead to legal disputes, accounting firms, it is difficult to protect their rights and interests.
3. CPA professional judgments. Professional CPA approach is a registered accountant in the course of their practice based on their professional knowledge and experience that the preliminary procedure and acts as its own analysis of a CPA, estimates, decide or choose. CPA trials throughout the audit process. Wise Judgement professionals can ensure the quality of audits under the premise of the audit to save time, reduce audit costs, but the professional misjudgments, ranging from the quality of audits and committed, often lead to audit heavy error. Once the audit due to lack of the CPA and the company has produced incalculable losses. Therefore, the continuous improvement of professional quality, and promote the work of the responsibility, the induction of good practice and a summary of experience, and continuously improve their professional capacity to judge, is a certified public accountant to ensure that quality audit, reduce audit risk, the only way to avoid the responsibilities of audit.
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