Research On The Signing And Performance Mechanism Of Incomplete Audit Contract

Why are caused to independent audit? The answer to this question is logical starting point of modern independent audit theory, also is the key to study the phenomenon of audit failure arrangements. The traditional audit motivation theory are from the audit function to explain existence of independent audit, and to some extent they provided a theoretical basis to study the audit institutional arrangements and its efficiency. But because they only concern about portion of audit institutional arrangements, rather than the whole networks, so, they are unable to explain the key issues of audit fields clearly. In essence, the independent audit is an integral part of the corporate family contract, and come into existence from supervision of firm contracts signing and performance. Therefore, it will be the audit theory pattern reform to study audit relationships and audit quality from the perspective of contract formation, paradigm change. Based on this, this paper studied the audit contract signing and performance mechanisms and analyze the influence mechanisms of audit contract efficiency, and propose the main strategy of incomplete audit governance based on incomplete contract theory. The significance of this study is, to provide a system for explaining the generation of independent audit and audit failure, and offset the insufficient of modern independent audit theory and support a new theory to improve the efficiency of the audit contract.There are always loopholes and gaps in the real business contract, it is bound by means of a binding mechanism to constrain and supervise the behavior of the main parties. Based on this, The paper relocate audit function in the incomplete contract network as:define property rights of main partied and their changes information in the enterprise contracts, determine the rights of the parties sharing the remaining fair. At the same time, elaborate the audit contract and its mechanism in contract network, point out audit contract is a "consensual" on the basis of self-government and equal status in all main parties. This will of autonomy comes from the anticipation of maximize the economic benefits and effect of audit services. Because there is uncertainty, contract language to describe the limited nature, the ambiguity of efficiency validation, audit contract is not complete. Incompleteness of the contract will have a profound impact on the process of audit contract conclusion and performance.Secondly, the article researched contracting mechanism from two levels of audit contract:The conclusion of the audit contract and the configuration of conclusion right. As the corporate contract that does not complete that will induce opportunistic behavior and rent on the organization's contention, the conflict of different contracts lead to different conclusion of the audit contract motives. Found that different ownership structure case, the audit contract conclusion showed one kind of state dependency:As ownership concentration elevation, hollowing out effect lead to shareholders choose high-quality auditors contracting incentives to cut; but shares a high degree of concentration, its shareholders select high-quality auditors contracting motivation enhancement. The conflict of debt contract shows as the creditors and shareholders, the more serious the conflict contract, the creditor the more high-quality audit concluded contract motives. Since the conclusion of the audit contract itself is one of enterprise value to reflect the signal, the article further studied the audit contract contracting motives from the perspective of signaling mechanism. Dynamically, the audit contract conclusion is the process to compete and game for contracting right to contracts. The article discussed the basic principle of the right to configure the conclusion of the audit contract, comparative analysis of single right model to share of configuration right mode. At the same time, tested a sample of Chinese listed companies audit concluded the general mechanism of contract.Thirdly, the article researched the performance mechanism of incomplete audit contract. It is important to study the legal and reputation mechanisms of incomplete contract mandatory and self-implement mechanism. The paper thinks, the incomplete audit contract implementation is the result of interaction of a legal mechanism and self-enforcing. When the incomplete extent is low, the law enforcement and deterrent punishment play a decisive role; The other hand is more dependent on the implementation of mechanisms for self-audit contract.Finally, the paper studies the reasons of efficiency loss of incomplete audit contract and governance strategies. The dissimilation of the audit contract signing rights is the origin of the loss of independence of auditors and audit contract inefficiency. The article concluded the alienation of contractual signing rights and point out that "incomplete" of audit contract and the opportunists Motivation is the right configuration Contracting source of alienation. As a public contract, the Auditing standards is always e flexibility in "field" space, so the audit contract partners could make the quality of supply and demand decision based on their own interests, thus affect the efficiency of the audit contract.In addition, performance barriers of the audit contract fulfillment will also result in the loss of efficiency. The governance of the incomplete audit contracts is a systematical work. they are included:The optimization of the audit contract conclusion is the right response to the alienation of the configuration of contract conclusion; In order to resolve loss of efficiency caused by auditing standards flexibility "domain" and the resulting of performance barriers, the article proposed classifications and specific initiatives to improve performance efficiency.