Study On The Relationship Between Management Fraud And Audit Efficiency

Since the end of the 20th century, the development of the audit shows that, the occurrence of a major financial scandal is bound to affect the development of the audit profession. With the Enron, WorldCom, and other famous enterprises scandals have exposed corruption, they have threatened the healthy development of capital markets, and aroused public's doubt on the independent audit. Depth analysis of the reasons about these scandals revealed that the management in the dominant position can not be ignored in these scandals, and they can't shirk its responsibility for fraud. Meanwhile, the results of the audit failure caused by management fraud have led some famous accountant offices to bankruptcy, which has sounded the alarm to the independent audit profession in order to remind the faced crisis of confidence and survival. Therefore, management fraud has been widespread concern by public. In addition, because of the fierce market, competition also contributed to an independent audit had to improve the audit performance in order to the audit profession's long-term development. So, the study on the relationship between management fraud and audit performance is a significant issue, which is related to the healthy development of market economy and the survival of the audit profession.Based on the correlated research at home and abroad, this essay studies the relationship between management fraud and audit performance, using normative research and empirical research, as well as theory and practice method. The article includes three parts and six chapters:The first part is the first to the fourth chapters. First, it introduces the research background and significance, research status at home and abroad, research contents, methods, and innovation, as this study's preparation and bedding. Then in the second, third and fourth chapter introduces theories about management fraud and audit, illustrates the dangers of management fraud, and also as a reference to the existing literature tries to analyze the relationship between management fraud and audit based on the existing research results. However, because of the difficulty of management fraud recognition and restrictions on costs and benefits, whether the independent audit can maintain a good performance is an issue to be tested.Therefore, this article tests the relationship between management fraud and audit performance by empirical method based on the theoretical analysis in the second part. This paper examines the relationship between audit opinion and management fraud to prove that management fraud is a significant factor about the audit opinion's selection. Then, management fraud sample is been divided into two different groups in light of the first conclusion to test the relationship between management fraud identification and audit performance. The Empirical result is consistent with the theoretical analysis, shows that the sample group whose management fraud is identified has a better quality of earnings management, which infers its higher audit performance.Finally, the third part of this chapter is the sixth Chapter, Conclusion and policy recommendations. It summarizes the conclusions of this study and puts forward the strategy of improving the audit performance in the two aspects of audit itself and the audit exterior factors, in order to make some help for our country's audit practice development.