Study Of The Correlation Between Negotiation Ability And Auditing Fees

Auditing negotiation refers to a process that auditors and the managementscommunicate with each other, consult and make decisions to solve disputes. In recentyears, the problems of the auditing negotiation have caused widely concerns in bothdomestic and international audit theory and practice circles. Auditing negotiationincludes the whole auditing process. All parts need auditing negotiation, whether it isthe recognition of financial statements or disclosures in the financial statements andaudit expense confirmation.Since the process of audit cost confirmation needsnegotiation, audit fees negotiation ability between the two should have effects.Butwhether it is as the same in our country, we still need further empirical tests.Based on the study of existing influence factors to auditing fees, this paper usesdata of China’s A share listed companies in2010as samples, to deeply research thecorrelation between negotiation ability and auditing fees. Conclusions are as follow:firstly, China’s listed companies auditing fee is influenced by the auditing negotiationability between auditors and auditees. In general, accounting firm’s bargaining poweris positively related with auditing fees, there is no significant influences to auditingfees caused by customer’s negotiation ability.Secondly,customer negotiation skillsshows a negative correlation with auditing fees when audited by the non-’top ten’, andthe score is on the opposite while customers are audited by and the "top ten", Thirdly,in listed companies audited by the non-’top ten’,customer’s size affects theirnegotiation ability.The larger size, the stronger ability of customer price negotiation,with more obvious price discount in comparison with smaller customers.According to research results, this paper puts forward related suggestions:First,we propose that government and industry organizations should give supports to China’saccounting firms to help them bigger and stronger and form themselves’ brandadvantages by making polices, so as to improve the negotiation ability; Thirdly, wesuggest that the accounting firm should improve audit quality.secondly, the listedcompany shall change scale advantages into negotiations advantages; Fourth, wesuggest that negotiators actively establish negotiation consulting institutions or getsupports about those organizations, to improve their negotiation ability; Finally, inview of the inadequate demand of high-quality audit market, put forward to breeddemand for audit demand, establish high-quality incentive mechanism etc.