Research On The Regulation Of CPA With Principal-agent Theory

Since the eruption of "Enron Situation" astounding the whole world, the United States issued at a surprising speed. The issuing of the act marks the end of independent regulation in the field of CPA, which had been existed for nearly one hundred year in U.S.A. At the domestic securities markets, false auditing cases emerged in an endless stream from "Qiong Minyuan" to "Yin Guangxia". It has been the focus that what should be done in the regulation of CPA to solve the frequent problems.This thesis aims to find out an effective way for CPA regulation by using the principal-agent theory. It consists of the following five chapters.The first chapter briefly points out the present situation in the field of CPA, the significance of the research and the frame of the paper.The second chapter introduces the main related concepts, puts the principal-agent theory into the research of the CPA regulation and provides the theoretical basis for the consequent research.Chapter III: After analyzing the domestic and international mode of CPA regulation, this chapter focuses on what the American new act enlightens us.Chapter IV: The first part gives a full investigation into the CPA audit quality existing widely in the field of CPA and the regulation of CPA need to be reformed urgently. The second part uses the principal-agent theory to study the regulation of CPA and find out the two main problems: The first is the distorted principal-agent relationship. The second is the lack of an effective incentive and constraint scheme.After fully discussing the long-standing deficiencies in the field of CPA, the fifth chapter puts forward the relevant countermeasures. The first measure is to establish the right principal-agent relationship. That is: the regulation of CPA should regard safeguarding social masses' interests as the primary goal; the CPA regulation should be led by the CSRC; the right of engaging the accountant's firm should be given to the CSRC. The second measure is to perfectthe incentive and constraint scheme, including: to standardize the charging of auditing; to implement the rotation of accounting firms; to reform the organization of the accounting firms, to set up prestige mechanism; to perfect the civil compensation mechanism and strengthen the punishing power.