The Relationship Of Audit Firm Tenure And Audit Quality

Since the born of CPA audit, audit quality has been the focus of audit. Recently there are a lot of fraudulent financial reports in the world,for example include Enron, World.com and Arthur Andersen's failure, and etc.. The audit industry got into a distrusted phase all over the world. The issue of mandatory rotation of audit companies has been disputed for long, and recently series of financial scandals bring it to many countries'notice again. Mandatory audit-firm rotation has been put up as a useful way to improve audit quality.This paper attempts to demonstrate the core of the issue by analyzing related theoretical views and empirical evidences. This study examines whether audit tenure is associated with audit quality. According to available theory researches, whether the mandatory rotation of audit company should been put into effect or not is determined by the whole impacts which it makes to cost, price, market competition and audit quality. Empirical researches had examined the relations of audit tenure and audit quality by various ways. But uniform agreement has not been reached about the mandatory rotation from the theory or the empirical researches.The thesis is launched from several following respects mainly: The part of the foreword states the motive of the study and main research theme; Chapter one is the theory of audit quality, it introduce why we need audit, the determinant of audit quality and the assessment of audit quality; Chapter two study if we need high audit quality, the low audit quality...