The Impacts Of Audit Quality On Legal Risk Caused By Non-audit Operation

Recent years had many accountants' embezzlements, not only involved in the scandal and faced with significant bankruptcy risk. It caused the auditor's existing environment deeply changed and reputation harmed. The effort level of auditor would decline in the strict legal regime when bankruptcy risk occurs compared with the social optimal level.Competition among audit firms is intense; the non-audit operation becomes a new trend in the field. After Enron scandal, most scholars think that the non-audit operation will harm the audit quality, and the legal risk faced by the auditor would be enlarged. This article analysis the complex relations between legal liability enlargement and audit quality influence against non-audit operation.Legal risks will increase the effective cause of CPA firms and the awareness it .Such firms will not be because of the increase in risk for non-audit business of "convergence"? This paper is due on the non-audit business growth caused by the increased legal risk and audit quality of the complex relationship between the discussion and legal responsibility in the quality of the audit summary of the literature on the ultimate conclusion by the author. We conclude from the observation that reasonable non-audit operation and in effective legislation may cause improvement of audit quality. Our analysis would provide valuable reference in auditor's legal liability determination for policy-makers and regulators.