The Research Of The Correlation Of The Earnings Management And Auditing Opinion

The certified public accountants (CPA) profession is a much-debated area, but its practicing quality can never be assessed solely by a limited number of cases. Given the difficulty in the assessment, this paper has attempted to use earnings management as the bridge and to examine the practicing quality of Chinese CPAs through the correlation between earnings management and auditing opinion. This article ,we use empirical research method .The main idea is :first, calculate the abnormal accruals according to the accruals separation method ,and then use the ratio of abnormal accruals to measure the level of earnings management ;second ,make regression models between the ratio of abnormal accruals and the auditing opinion ,if the discretionary accruals is statistically positively correlated to auditing opinion , which means that CPAs in China can audit earnings management .Based on an empirical study on the 2004 financial reports of the listed manufacture companies, we have concluded that CPAs are able to audit earnings management. Structurally ,this article can be separated into four parts .First, we discussed what is earnings management ,and what other literatus have researched .Second ,we explained how do we choose the earnings management measuring models .Third ,we introduced our empirical research method and the dates we used .Last ,is the conclusion.