Related Research On CPA Non-audit Services And Audit Independence

With the development of market economy, CPA not only provides audit services to clients, but also provides non-audit services, including Management Consulting Service. Whether the provision of non-audit services leads to earnings management and affect the independence of the audit or not, which is still a hot issue in Audit academic and vocational sector. Today, it has not reached a consensus yet. Some people think that Non-audit services will affect the audit independence, but some people show that Non-audit services will not affect the audit independence. For these reasons, this paper uses the extent of earnings management of list firms as agent variables of audit independence. In order to reveal whether the provision of audit services and non-audit services would affect the audit independent or not, we tested the empirical relationship between Earnings Management and non-audit services.Based on the principal-agent theory, asymmetric information theory and agency costs theory as supporting theory . Referring to research methods and conclusions of the related reference , we combination the Chinese unique background. This paper proposed hypothesis to test whether the provision of Non-audit services effects audit independence.We first chose the disclosed management consulting services in the annual reports of listed companies in 2003-2005 year as the study samples, use the result of discretionary accrual from modified Jones model, then used the logistic regression analysis of 96 samples which was selected conduct the study, considering the 17 control variables, the results showed that: the provision of non-audit services does not reduce the audit independence. Instead, it helps to enhance the independence of the audit; Audit fees significantly correlated with the earnings management, listing firms will try to pay higher audit fees in order to purchase accounting principles, driven by interests ,when auditors and management conspiracy , CPA may make inappropriate concessions; control variables associated with Accounting Firm , the size of audit firms has negative relationship with the earnings management ,there is the positive relationship between audit age and earnings management. on the corporate governance structure of the control variables, the more concentrated ownership, the lower the proportion of independent directors of the board, the greater the likelihood of manage earnings ,the poorer the audit independence. Listed companies setting up audit committee is no significant impact on the audit independence; These different motives of earnings management such as the size of listed companies, the number of subsidiaries, inventory ratio, the proportion of accounts receivable , have different effects on the independence of the audit.