Study On The Audit Quality Of CPA On China Securities Market

Audit service provides reasonable assurance for the relativity and reliability of financial information, which plays a crucial role in reducing the information asymmetry between investors and management on securities market. However, with the frequent exposure of the financial fraud of those listed companies such as Qionminyuan,Hongguang and Yinguangxia, the audit quality of CPA has already drawn unprecedented concern of the society. It has become a grievous problem that cannot be ignored any more. Under the circumstances, it is very urgent to make a study on this issue.Based on the principle of information economics and institutional economics, this dissertation analyzes the mutual reaction between demand & supply of independent audit service and the inherent mechanism of audit quality, which provides theoretical basis for the following research. Secondly, the author attempts to investigate the status quo of CPA audit quality on securities market from two aspects: the result of the audit quality inspection disclosed by the supervision departments, and the typical cases of audit failure that has been exposed. Thirdly, further analyses of the contributing factors for low audit quality are made from three perspectives: audit demands of listed companies, the supply of audit service, and the supervision on the CPA profession. In China, the imperfect corporate governance leads to inadequate voluntary demands for independent audit, and accordingly results in the lack of CPAs' economic motives for improving audit quality. On the other hand, the present institutions fail to induce CPA to take the initiative in providing high quality service. Meanwhile, the imperfect supervision system of the profession may encourage CPA to take the risk of issuing false audit reports. Finally, according to the research, the author makes some suggestions on our institutional arrangements to improve CPA audit quality of listed companies in our country.