Research On Auditing Independence

Independent audit, as one of the underlying components of capital market, is the key point of financial report supply chain. High quality audit is an important factor to the efficiency of capital market, however, the quality of audit is synthesized by both the auditors' professional capacity (probability of detecting commission and fraud) and their independence (probability of disclosing detected commission and fraud). Therefore, auditing independence is an issue concerned closely and can be rated as the quintessence of CPA's professional ethics. Audit profession should owe its current status and prestige, to a high degree, to the persistent auditing independence. Since the audit profession's arising, the profession, regulators and academies had been exploring the problem of auditing independence without suspending a moment.The problem of auditing independence has been argued intensely and continuously in America since 1970's, which indicates that behind auditing independence there are many sharp, complicated issues to be discussed further. Looking closely at Chinese capital market, there isn't an environment demanding for audit service with high independence yet. Especially with the audit failures, such as "yingguangxia" case, the independence of CPAs and the value of this profession are doubted commonly. In view of these phenomena, the author tries to do a systemic study on auditing independence, hoping to offer some references and experiences to our reform. This dissertation limits its scope to the issue of CPA's auditing independence and mainly adopts normal research method, using positive research conclusions to support its standpoints as possible in the meanwhile. The following is the structural arrangement of this dissertation.Chapter 1 aims at formulating a theoretic basis for auditing independence. Firstly, the author reviews the evolving history of independence concept, which can be described as from kinds of independence conceptions to conceptual framework for auditor independence. In the author's view, the conceptual framework has provided a uniform language, boundary and guiding ideology for auditors, investors, management and regulators to discuss and understand auditing independence. It is also a kind of useful tool for setting independence standards and settling independence problems when there isn't correspond independence standards. Then the author defines the attribute of auditing independence as an integration of behavior constrain and core value, if behavior constraint is regarded as exter-discipline, then core value can be regarded asself-discipline. Historically, the formulation of behavior restraint perspective resulted from the vicissitude of audit principle-agent model which was caused by the separation of ownership and operational rights, but that of core value perspective was the result of rethinking auditing independence in order to add value to the profession when the public expectation gap was becoming bigger and bigger. Under core value perspective, complying with auditing independence is no longer a kind of mechanical but active reaction transmitted from auditor's internality to his or her external constraint and becomes an essential professional quality for a CPA to exist and develop.Chapter 2 focuses on institutional arrangement of auditing independence. Firstly, with independence risk as the core concept, the author constructs a integrated framework for analyzing the antecedents and consequence of independence risk, which supplies a multi-angle to assess the effectiveness of institutional arrangement for mitigating independence risk. This framework includes environmental antecedent of independence risk, mitigating factor of environmental antecedent and potential consequence of independence risk. Its conclusions are : (1) Independence risk is the result of the environmen filled with direct or indirect incentives and judge-based decisions; (2) Mitigating independence risk depends on the effective portfolio of such factors as corporate governance, prof...