Institutional Arrangements Of The Independent Audit Certified Public Accountant Behavioral Problems

Based on the fundamental theories of the New Institutional Economics (NIE), this thesis particularly analyzes the interrelations between the development of independent auditing and the certified public accountants' behaviors in both USA and PRC. The thesis is divided into six chapters. The first chapter endeavors to build the analytical framework of the rest of the thesis. Chapter two to chapter five expatiates upon the interrelations between the behaviors of certified public accountants (CPAs) and the development of independent auditing in the context of USA. Chapter six discusses such interrelations in the context of the specific situations in PRC. Major analytical methodologies and contents of each chapter are as follows:Chapter OneThis chapter endeavors to construct a theoretical framework for analyses of the rest of the thesis. After a brief introduction on the development of NJE, the chapter gives a description on some fundamental concepts, such as the basic assumption of human behaviors, the origins and constitutions of the institutions, Game Theories and the New Institutional Economics, the institutional arrangement and its changes, the relationship between institutions and organizations, etc. and provides the basic framework for institution-based analysis. In the respect to the institutional arrangement of independent auditing, the author points out that in the "vertical" changing process of independent auditing, the game continuously played between the government and the CPA profession, which focuses on the cost-benefit effect of independent auditing, is the major momentum that pushes the changes of independent auditing, and strengths comparison between each party in the game is the vital factor to determine the success or failure of the changes of independent auditing. In the "horizontal" institutional arrangement, the assumptions of limited rational economic person and the opportunistic behavior tendency are the basic merit standards of CPAs' behavior choices. The game theories and the cost-benefit evaluation are the basic methods for analyzing the behaviors of CPAs. The consistence between the intention of the institutional arrangement and the CPAs' behavior choice is the evaluation standard of the independent auditing performances.Chapter TwoThis chapter mainly expatiates upon the origins of the institutional arrangement of independent auditing in USA. The process of establishing the role of independent auditing has experienced a game with two phases, self-arrangement and compulsory arrangement.The emergence of public company provides the prerequisite for the game in the first phase. With more and more large-scale public companies come into being, owners of the public companies and their managers have been involved in continuous games which aim at reducing their agency cost. As a result of such continuous games, it is found that independent auditing can reduce the agency cost between the owners and the managers, thus it becomes for the first time an effective institutional arrangement that is voluntarily accepted by some companies. The second phase witnesses parties such as the group of accounting information users, the group of accounting information providers, the CPA profession as well as the government involving in the game with their respective interests. As the social ideology and strength comparison between those parties change, the game process is not fully recognized by the society until the breakout of the economic crisis from 1929 to 1933. Consequently, independent auditing becomes the statutory arrangement in the securities market of USA.Chapter ThreeThis chapter focuses on the regulatory institutional arrangement for independent auditing in USA and changes thereof during the past years. The basic services provided by the government are the set-up of essential rules for the game, and the regulatory services provided by governmental bodies constitute the basic institutional arrangement of independent auditing. With the implementation of the Securities Act in the 1930...