Certified Public Accountants Industry Specialization And Audit Quality Correlation Studies

New audit standard and modern risk-oriented audit will promote CPA firm to reorganize their staff and practice by industry. Meantime, CICPA has encouraged CPA firm to grow bigger and stronger by industry specialization. Based on these, this dissertation wants to study on the impact of industry specialization on the audit quality in Chinese audit market, and wants to support CPA firm to develop the industry specialization.In this paper, firstly, after the studying backgrounds and significances, and its current research situations in board and home being analyzed systemically, the researching frame and methods in this paper were put forward. Secondly, expounded the meanings of industry specialization and audit quality, explored the theory of the existence and growth of industry specialization from economics, and analyzed the causes of industry specialization. Based on these, theoretically analyzed the relationship between industry specialization and audit quality and put forward research assumptions. Then, using a large sample of listed companies from2007to2009in A shares market, we examined the association between audit firm industry specialization, measured by a client’s level of weighted market share in an industry, and audit quality, measured by a client’s level of discretionary accruals. By linear regression and curvilinear regression, the finding reveals that there is a significant positive relationship between industry specialization and audit quality. This paper validated the Learning Effect of industry specialization. Finally, this paper analyzed Chinese audit market environment for the development of industry specialization of audit firm, and according to the status of industry specialization propose some policy measures.