Customers The Importance Of The Relationship Between Audit Tenure And Audit Quality Research

Influence factors of audit quality have become a hot topic both in auditing theory and in practice. The relationship between client's importance and audit quality has been disputed all the time, and it was not reached a consensus yet so far. So did the relationship between audit tenure and audit quality. According to this, the researcher claims that the external impacts regarding of the research of this dissertation should be considered, such as policy environment. In order to standardize Chinese audit industry, protecting investors and protecting stock market,Chinese government issued numbers of laws and regulations in recent years. The regulations regarding to hearing the civil compensation cases caused false statement in the stock market and The regulations regarding to fixed rotation of signed certified accountant who audit the business of securities and futures which issued in 2003 were quite significant. The first regulation is the key to China audited civil action; furthermore, it was emphasized the legal liability of the Certified Public Accountant. The second regulation firstly proposed for Certified Public Accountant for a company to provide audit service may not exceed five years. The audit quality should be influenced by these regulations. Will the influence in audit quality changes client's importance and audit tenure? Will these regulations be implemented efficient and effectively? There are not experience evidences about issues so far. However it became the purpose of this dissertation. Moreover, this dissertation further studied the common influence on audit quality from client's importance and audit tenure. To important clients, will the longer Certified Public Accountant's audit tenure hurt audit quality? Will the influence on audit quality change, after two regulations were issued in 2003?The method of this dissertation includes normative research,empirical research and comparative research. Firstly, the researcher summarized research achievements on client's importance,audit tenure and audit quality both at home and abroad. Secondly, the researcher analyzed the present situation of the audit quality, and compared the existing weights of audit quality. Then, the researcher chose the absolute value of the controlling accrued profit weighted auditing quality. According to the theory , the researcher selected 3960 A-share listed companies in China as research sample between 2001 and 2006. Furthermore, those figures were divided into two groups; there are 2001-2003 year group and 2004-2006 year group, respectively. Through descriptive statistical analysis,correlate analysis and linear regression analysis, the researcher compared with the result of the two sub samples and got the following conclusions. The relationship between the Certified Public Accountant's tenure and the audit quality was from negative to positive. But the client's importance was negatively related to audit quality both in the two sub samples. It proves that The regulations regarding to fixed rotation of signed certified accountant who audit the business of securities and futures achieves the anticipative effect to improve the auditing quality. On the contrary, The regulations regarding to hearing the civil compensation cases caused false statement in the stock market does not work effectively as the first regulation dose. This dissertation further isolated the important client's group, and the researcher found that to important clients, the relationship between the Certified Public Accountant's tenure and the audit quality was also from negative to positive. The result proves the effect of carrying out fixed rotation of the Certified Public Accountant. At the final part of this dissertation, according to, the researcher presented enlightenments from empirical research's outcomes and the limitations of this dissertation.