1. Reasons for the formation of accounting firm risks
(1) Lack of capital market and effective accounting firm governance structure
my country currently does not have a standardized and effective The capital market has not formed an effective market mechanism for professional managers and a real corporate governance structure. The management of listed companies lacks the intrinsic motivation to emphasize the authenticity of accounting information and the voluntary demand to improve the quality of independent audit services. On the contrary, in order to increase their performance-based compensation, ensure qualifications for allotments, avoid special penalties or delisting, conduct insider trading and manipulate the market, managers of listed companies generally have fraudulent impulses such as fabricating accounting information and manipulating profits. Therefore, on the one hand, the increase in fraud factors makes it difficult for CPAs to audit their businesses, and it is difficult for CPAs to detect misstatements caused by fraud; on the other hand, listed companies are more inclined to hire accounting firms that lack professional ethics and can collude in fraud. .
The number of lawsuits and compensation claims continues to increase.
There are an increasing number of lawsuits and compensation claims against accounting firms and certified public accountants for improper practice. Investigation and analysis by professional indemnity insurance companies show that the number of claims notified by internationally renowned accounting firms is constantly increasing, the number of claims is also increasing, and the amount of claims is rising rapidly. The investigation showed that from 1974 to 1989, the amount of claims paid by accounting firms was US$1.8 billion, while from 1980 to 1995, the amount of claims rose to US$9.5 billion. This has led to the current situation of "litigation explosion" and "insurance crisis", and the professional prudence and professional ability of certified public accountants have become the focus of social attention.
(3) It is more difficult for certified public accountants to practice
With the development of the economy, the organizational structure and economic business of enterprises are becoming more and more complex, and the continuous reform of accounting systems has made accounting treatment methods It involves more subjective judgment, thus increasing the difficulty of practicing as a certified public accountant. From the perspective of internal factors, many firms lack corresponding quality control mechanisms, or although they have designed quality control mechanisms, they have not been effectively implemented; firm staff lack the knowledge and skills required to practice prudently, blindly pursue business, and lack professional services. Spirit and personnel quality are uneven.
II. Withdrawal of professional risk funds by accounting firms
(1) Reasons why accounting firms withdraw professional risk funds
For a long time, due to civil legal liability The system is imperfect and supervision mainly relies on administrative sanctions and criminal liability, especially administrative liability. However, very few CPAs have actually been held criminally responsible. Because legal liability is low, it indirectly contributes to dishonesty in the CPA industry. In June 2007, the "Several Provisions of the Supreme People's Court on the Trial of Civil Infringement Compensation Cases Involved by Accounting Firms in Auditing Business Activities" was issued, clarifying the civil compensation for losses caused to interested parties due to the carelessness or fraud of certified public accountants. responsibility. Correspondingly, the net assets of an accounting firm are limited, and if you are not careful, you may go bankrupt. Therefore, it is necessary for accounting firms to withdraw risk funds and purchase liability insurance to prevent or reduce the crisis of bankruptcy due to failure in legal proceedings, and to play a certain protective role in the healthy development of the CPA industry.
(2) Relevant regulations on the withdrawal of risk funds by accounting firms.
In March 2007, the Ministry of Finance officially promulgated the "Management Measures" to standardize the specific management of practice risk funds of firms. In the latest "Management Measures", it is clearly stipulated that "the firm shall withdraw occupational risk funds at a ratio of no less than 5 at the end of each year based on the audit income of the current year."
In addition, the purpose of the professional risk fund is to cover civil compensation arising from professional liability and legal expenses such as attorney fees and litigation costs related to civil compensation. The author investigated the risk response situation of domestic enterprises through a questionnaire. The statistical results are shown in Table 1. Although the "Administrative Measures" stipulate that when firms purchase occupational insurance, the actual insurance premium paid can be deducted from the occupational risk fund, which has an offsetting effect on the statistics of the occupational risk fund, but the survey shows that only 7.84% of firms purchased occupational insurance. Insurance, therefore domestic firms have not fully withdrawn occupational risk funds in accordance with the provisions of the "Administrative Measures", and some firms have obvious insufficient funds. Currently, the firm's occupational risk fund is managed by the firm itself. Because the civil compensation system has not yet been officially launched, the risk fund has existed in name only. Although the accumulation of professional risk funds is large, it only remains on the books, and only a small part corresponds to monetary funds. Some accounting firms make false provision, omission, or omission, or make provision at the end of the year and write it off at the beginning of the year. In administrative measures, penalties are imposed for violations of its provisions. The author believes that it is not enough to order corrections and announcements to regulate the behavior of firms. The financial department should formulate more stringent punishment measures to make firms more consciously withdraw occupational risk funds in accordance with regulations; on the other hand, the Institute of Certified Public Accountants should also Establish a special occupational risk fund management department, learn from the housing provident fund accrual method, open special accounts for each firm, and carry out special account storage. When occupational risks require compensation, the industry management department will allocate it, and the insufficient part will be made up by the firm. This can ensure that the special funds are earmarked and paid in a timely manner when facing civil compensation. We must truly implement the withdrawal of professional risk funds, accrue them in accordance with the law, and effectively accrue them, so that risk funds can truly play a role in dealing with risks when civil compensation is involved.
Third, the legal opinion of the accounting firm
(1) The requirements and responsibilities of certified public accountants in complying with laws and regulations
Currently, the legal responsibilities of certified public accountants It is gradually expanding, especially in Western countries. After the 1980s, both the interpretation of court cases and the attitude of the CPA professional group have changed greatly from the past. Due to the rise of consumer protectionism, the application of audit insurance theory is still in all business fields, the participation of CPAs is gradually increasing, and the practice of CPAs is increasingly affected, even hindered or impacted. In the two years since my country's Supreme People's Court issued Fahan (1996) No. 56 in April, there have been more than 500 civil dispute cases arising from the practice of certified public accountants in judicial practice. "Compliance with auditing standards means immunity from liability" is difficult to accept emotionally by the legal profession. A series of financial fraud cases in the Chinese stock market have involved the civil and criminal liability of certified public accountants and accounting firms. Therefore, CPAs must abide by laws and regulations and avoid legal proceedings. Strengthening human resources management, strictly controlling firm quality and business management, and withdrawing occupational risk funds can reduce practice risks and avoid legal proceedings. CPAs are not very familiar with many special areas involving legal issues, so when they encounter problems in practice, they should seek legal advice from lawyers in a timely manner so that further actions can be taken in a timely manner based on legal advice.
(2) The specific content of legal opinions in the practice of certified public accountants.
On the one hand, CPAs should try to hire lawyers who are familiar with relevant laws and regulations and the legal responsibilities of CPAs, and have experience in handling similar situations. When a certified public accountant encounters a major legal problem, he or she should discuss the potential dangers in detail with the hired lawyer, carefully consider the lawyer's advice, and try to reduce the firm's legal liability;
On the other hand, you can consider Hire a lawyer to handle the legal affairs of our firm so that you can better understand the situation of our firm. Most international firms have hired specialized lawyers to handle various legal matters, and some relatively strong domestic firms also have specialized lawyers. As can be seen from Table 1, among the 52 valid questionnaires from the firms, only 2 showed that lawyers were hired separately to train firm staff to improve their risk awareness and legal standards.
Most domestic firms do not have professional lawyers.
First, because the cost of staffing a dedicated lawyer is high, only firms of comparable strength can hire separate lawyers. Second, according to the questionnaire survey, the business of most firms is mainly focused on the audit and capital verification of financial statements of companies listed on the small and medium-sized boards. The small size of clients and the simplicity of the business make it unnecessary for many firms to hire separate dedicated attorneys.
IV. Risk response strategies of accounting firms
(1) Improve the quality of practice and strengthen system management and control.
Firms should propose professional risk funds in strict accordance with the requirements of the "Measures", effectively improve the quality of practice, and strengthen firm quality control. Only by improving the quality of practice can we fundamentally reduce practice risks. Firms should set up a special quality control agency to conduct project quality control reviews of important and risky businesses, appropriately punish employees who engage in improper practices, and implement a three-level review system for business papers.
(2) Formulate punishment standards and systems.
In addition to implementing strict management mechanisms, the financial department should also formulate systematic and standardized punishment standards to appropriately punish accounting firms that violate regulations and disciplines. When applying administrative penalties, the financial department must consider the effectiveness of administrative penalties, compared with civil penalties and criminal penalties, so that firms can more consciously withdraw occupational risk funds in accordance with regulations.
(3) Establish a specialized professional fund management department
The Institute of Certified Public Accountants can establish a specialized professional risk fund management department. AICPA can learn from the housing provident fund accrual method and open a special account for each office and store it in a special account. When occupational risks require compensation, the industry management department will allocate it, and the insufficient part will be made up by the firm. This can ensure that the special funds are earmarked and paid in a timely manner when facing civil compensation. This will truly implement the withdrawal of professional risk funds, accrue them in accordance with the law and effectively accrue them, so that the risk funds can truly play a role in dealing with risks when civil compensation is involved.
(4) Establish a professional legal consultation system
Accounting firms should fully consider and conduct in-depth analysis based on the actual situation to decide whether to hire a lawyer to handle the firm's legal affairs alone.