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Company Audit And Expert Responsibility

Posted on:2005-11-12Degree:DoctorType:Dissertation
Country:ChinaCandidate:X F ZhouFull Text:PDF
GTID:1116360122481884Subject:Civil and Commercial Law
Abstract/Summary:PDF Full Text Request
The auditor serves a key role in our society by certifying public company's financial statements. The audit report is relied upon by investors, shareholders, and creditors as a valuable tool to help them to make trade decisions. However, recent accounting and auditing scandals suggested that the auditor didn't fulfill its function properly. What's wrong with the auditor, Can strengthening the auditor's professional liability cure it? The purpose of this dissertation is to analyze the auditor's incentive structure under the current framework of company audit, and the influence of the rule of professional liability on the behavior of the auditor. This dissertation is divided into eight chapters. Chapter One is the introduction of the dissertation. The other parts are as follows.Chapter Two analyzes the incentive structure of the auditor under the current legal framework of company audit. The legislature expects the auditor to act as watchdog for the public interests, but the auditor cannot maintain independence when it faces the conflict of interests under the current framework of company audit.Chapter Three describes the history of company audit in Britain and U.S.. The history shows that company audit emerged as a response to the problem of asymmetric information and financial fraud. The experience of U.S. shows that it is difficult to solve the problem of auditor independence by increased regulation.Chapter Four describes the history of company audit in China, and analyzes the demand and the supply of audit service. China's capital market is heavily regulated and the statutory company audit is one of the products of government regulations. Under the heavy regulation, the market mechanism cannot work properly and the auditor lacks the incentive to keep the reputation of objectivity and independence. Chapter Five analyzes the legal rules of auditor's professional liability to third parties. The research finds that it is difficult to deter the auditor's malpractice by strengthening the auditor's professional liability under the current legal framework. Chapter Six analyzes the impact of liability insurance on the function of professional liability, the expansion of professional liability, the litigation process, and the professional regulation. The impact of liability insurance on the auditor's professional liability is profound. Whether the liability insurance can enhance or undermine the functions of professional liability depends on the ability of insurer to monitor the behavior of the insured.Chapter Seven compares the evolution of organizational form of accounting firms in China with that in U.S., and analyses the relationship between professional liability and the choice of organizational form of accounting firms. We recommend that accountant should be allowed to choose freely the organizational form of accounting firm.Chapter Eight concludes that it is difficult to deter the auditor's malpractice or to change the auditor's incentive structure by strengthening the auditor's professional liability under the current legal framework of company audit.
Keywords/Search Tags:Responsibility
PDF Full Text Request
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