Analyzing The Monitoring System Of Auditing By The Agent Characteristics Of The Auditor

When the behaviors and utility functions of the firm owner and the auditor are described, the rational agent characteristic should be applied as a basic assumption. This characteristic certifies that the auditor should share risk in the corporate governance structure. Adopting rational agent characteristic could add the auditor into corporate contract to educing optimum solution; opening out the auditor incentive factors in auditing demand theory and the monitor mechanism of auditing.A multi-agent corporate model including the firm owner, the manager and the auditor of the corporate is analyzed in the paper, the conclusions are:⑴educing the optimum solution of model which could prevent the manager and the auditor becoming collusive or skulked;⑵clarifying the relationship between monitoring of the firm owner and working of the auditor, and illustrating the behavior combination of optimum solution;⑶further analyzing the relationship among monitoring degree, punishment of auditor and the auditor risk. Adapting the model from a single term to serial terms, and adding the non-monetary utility of auditor--- reputation into the model;⑷describing behavior of the firm owner in reality and clarifying the necessity of monitoring by the owner and the environment improvements it needs. By analyzing the model and clarifying the behavior character of the owner, the conclusion of paper is: if the firm owner could and should monitor the auditor, then there must be a auditing contract which could prevent the manager and the auditor become collusive and skulked. But the firm ownercannot monitor the auditor effectively in reality, so we should improve external environment of auditing, including the setting of auditing statement, the external market factor, and the punishment system of auditor to incentive the firm owner's ability and willing to monitor the auditor.