How Environmental Matters Affect The CPA Audit

This paper, on the first, summarizes opinions about the relationships betweenCPA financial statements audit and the disclosure of environmental issues bothabroad and domestic as the theory basis. Then we quoted the system background anduse two basic theories,Theory of Decision-making and Theory of Accountability,tofurther argue the reasons why CPA should pay attention to environmental mattersduring their audit. After that, we use audit risk model as evidence, to learn thatenvironmental issues can influence CPA audit. Still, by taking audit fee and auditopinion as two dependent variables, we set up their relationships with the disclosureof environmental issues one by another to do empirical analysis. Taking the listedcompanies which should fall in to “heavy pollution industries” category as our objectof study, we use Logistic regression model and multiple linear regression model toanalysis how the disclosure of environmental matters are going to affect CPA audit.The study outcome shows that for those listed companies which belong to “heavepollution industries” category, their disclosure of environmental matters (which areall about the company’s contribution to protect environment, all that positive deeds,etc) has a negative correlation with CPA non-standard audit opinion and has positivecorrelation with the audit fee, which is to say, the more specific disclosure aboutenvironmental matters those listed companies make, the less likelihood that CPAthink about potential audit risk, the more chance CPA will give standard auditopinion, the more audit fee CPA get.Given the findings of this paper, we recommend that: Since there’s a differenceif CPA take environmental matters into consideration during their audit, which maycomprise knowledge of various branches, like environment relevant know-how,sociology and statistics. The CPAs, therefore, should get to know someenvironmental laws and get fast learn about business sewage process, and all thisneeds CPA enhance their ability in these fields. They can also effectively solve theseproblems they are not familiar with the help of communicating with environment experts in time. Besides, it is highly recommended that our country set up explicitrules about environment accounting, which for one thing, help solve the problem of alack of generally accepted principles for conducting audit when think aboutenvironmental matters. On another, this helps improve the audit quality.