Particularly in the year 2001, aseries of listed companies, such asYinguangxia and Maikete, werepublicized for their financial frauds,which triggered the drastic downward ofChinese stock market and thus madeenormous investors sustain great losses.The public also focused on the auditorsinvolved in these cases with vehementimpingement. When the public put theirconfidence on international accountingfirms, a series of U.S. mammothmultinational companies, such as Enron,WorldCom, and Xerox, were alsodisclosed for fraudulent financialreporting, which led to the demise of agreat name, Andersen. The enormousimpacts of these cases on the publicaccounting profession are really rare. Thisarticle attempts to draw some lessons fromthese cases based on deliberations.
It is an issue of great concern to the society ingeneral as to how the institutes of CPAs can play theirroles in managing and promoting the self regulation ofthe profession and what self-regulation practice shouldbe established. The article provides a good look into theappropriateness, legality and necessity of self-regula-tion management of the institutes of CPAs and variouspractices of self-regulation in the profession.
