The Research On Evaluation System Of Accounting Firm's Audit Quality In China

A series of financial fraud and audit failure has occurred in Chinese stock market,which not only exposes the current situation of our CPA audit's quality is worrying,but also leads to the public's nonconfidence in and discredibility on the authenticity of listed companies' financial information and the role of "economic police" acted as by CPA,which has brought great crisis to CPA striving for credit on the basis of quality and development on the basis of credit.Hence,we can work out a set of evaluation systems to objectively evaluate audit's quality which can not only promote the firms to boost audit quality,but can also change the public's distrust to CPA.Thus,it can help investors reasonably choose the fight firms to provide auditing services,reducing investment risk.Despite the large number of scholars have studied the audit's quality from different points of view,and have put forward a number of ways,but most of them did not consider the effects of the introduction of risk-oriented audit on our audit's quality.So it is unscientific,irrational and practical.The supervising and managing departments usually recognize the qualifications of the accounting firms which take on difficult auditing services,only according to the time the firm was set up,how many CPAs and employees the firm has,and how many operating income it can get.The qualification recognization cannot completely reflect the comprehensive strength power of the accounting firms.Thus,it is usually not persuasive.Therefore,at the present stage,we need to work out a comprehensive set of audit quality evaluation systems that are suitable for the risk-oriented audit model,so that we can get a reasonable and objective evaluation on China's accounting firms' audit quality. This paper is based on the accounting firm's audit quality.Through analyzing the particularity of the accounting firm's audit quality,the paper raise the evaluation index system on accounting firm's audit quality should be constructed from wholly,multi-level and omni-directional in China. Though many factors of affecting audit quality,the paper divide the factors that affect the audit quality into internal and external influencing factors,in accordance with the principles on dialectical relationship of internal and external conflicts in Contradiction,and design 5 primary-level proxy that is the size of accounting firm,wether the risk of material misstatement can be identified and assessed,the single audit quality,brand reputation,and the recordation which accouting firm have been punished,as well as 14 secondary-level proxy that is the number of workers which accouting firm have and whether accounting firm have the industry expertise,according to the principle of selecting index that is the combination of comprehensive and importance,manageable,cost-effective,scientific,comparability,the combination of qualitative index and quantitative index,combined with influence of modern risk-oriented-Audit.In this paper the analytic hierarchy process is used to determine the weights of indexs,and indicators' evaluation criteria are set out based on 2007 Annual Report and the information of firms which the AICPA has diclosed.Finally,we select randomly 30 accounting firms as samples to verify the accounting firms' audit quality evaluation index system that this paper tries to work out,and find that this index system can reach a certain applicability.