Auditors Of Listed Companies To Change

The efficiency and security of the operations in capital market mainly depend on the quality of marketing information that definitely, CPAs are responsible for appraising. As the growth of the security market in China, the auditing service also has changed dramatically, and a series of great transformations have been leading the CPAs to maturity. During the past years, we have experienced the throes from independent auditing market. Several big illegal cases, such as "Qiong Minyuan"in 1997 and "Yin Guangxia" in 2001, have attracted attention widely from the whole nation and meanwhile, more and more security market information users started to speculate on the following questions: At which degree can the independent auditors guarantee the quality of the information system in the security market? What kind of role do the auditors play in the present security market? This paper focuses on the analysis of auditor changes that can further reveal the dynamic relationship between auditors and listed companies.Generally, auditor changes occur frequently in security markets, especially in more mature ones. The frequency of auditor changes in one specific security market is great important for investors and market supervisors to make reasonable decisions. This paper tries to explain the following aspects of auditor changes including the motives of auditor changes, disclosure of information and the rule of selecting auditors and so on. The general idea is using the relevant statistical data to demonstrate the potential negative economical consequences in auditor changes, in order to support or give some proposals on supervision policy of security market audit. Thus, this paper provided elementary analysis through such five parts as followed:ⅠGeneral analysis of auditor changes. The defect of the corporategovernance of the listed company breaks the balance of auditing relationship between the listed company and CPAs. Furthermore, the self-engaged mode and the low degree of centralization in audit market strengthen the unbalance between them. Consequently, auditors are subordinate to the listed company. This kind of relationship may generate varieties of negative economical consequences.Auditor changes occur when the company hires a new auditor other than old ones. According to the different initiators, auditor changes can be divided into three kinds: initiative changes, coercive changes and resignation. Then, by the cases of auditor changes happening in our security market between 1997 and 2001, one conclusion is drawn in this paper that the number of auditor changes is increasing year by year, among which the dismissing auditor is the main type while resignation becoming less and less. ⅡThe first type of auditor changes: Initiative changes. Initiative changes play an important role in auditor changes. The demonstrations have shown that the true motives for company with certain characteristic to dismiss auditors aren't disclosed. In selecting the successor, the listed company prefers to choose the auditors which are located near the listed company and with smaller scale and have low probability of showing un-standard auditing opinions.This paper takes 221 cases of initiative changes happening from 1997 to 2001 as samples to study the economical consequences of auditor changes. It argues that the listed company could reach its profit objective just through sugaring up its financial performance. This argument also means that the independence of auditors has been affected. Especially among the listed companies that had been shown un-standard opinions the year before, the rate of sugaring up auditing opinions rises up to a large extent. When the auditor's scale is becoming smaller and smaller, auditing opinion is easier to be prettified, which brings a little bit specificinfluences on the independence of auditors.Ⅲ The second type of auditor changes: Coercive changes. Those cases only occurred in the year of 1998, 2000 and 2001, because of the merge and the losing of certification. A...