Case study of Audit Failure of Small and Medium-sized Accounting Firms

Abstract

Accounting firms are an indispensable party in the securities market and play a role that cannot be underestimated in supervising audited units and protecting investors. With the implementation of the dual filing system, small and medium-sized accounting firms have also begun to enter the securities market, which has further developed the securities market. However, in order to undertake business, small and medium-sized firms sell audit opinions to enterprises with caps with questionable financial quality, and audit failure is inevitable. This paper takes *ST Xinyi as an example, analyzes the reasons for its fraud methods and audit failures, and puts forward some suggestions to reduce the occurrence of audit failures of listed companies by small and medium-sized firms.