| Summary: | This dissertation studies the discipline of auditing and fraudulent accounting. The investigation of literature review initially concerns about the basic concepts of auditing and audit risk, and then followed by fraudulent accounting which has direct impact on audit risk. The literature tries to discuss audit risk and fraudulent accounting separately and then presents the relationship between the two.
Based upon this, firstly, backgrounds of Chinese auditing environment are analyzed to have a preview of the conditions in the case, and then a case study is employed as the methodology to find the gap between literature review and the truth in case study. From the analysis, it can be concluded that literature can explain most of the truth in the case except some particular points that are of Chinese characteristics.
Finally, conclusion is derived from comparisons and contrast between Guangxia and Enron to stress the culture difference in terms of corporate scandals. Possible suggestions are given from the inspiration of U.S. Sabanes-Oxley Act to solve Chinese corporate scandal problems and improve business performance in stock market. Limitations are also given to state the constraints to this dissertation and any improvements that maybe needed.
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