Auditor Change, Audit Quality And Regulatory Effects

In the audit market, audit services are the particular commodity in circulation.Listed companies the right to choose their own satisfactory goods, audit services, inthe audit market, Of course, you must follow some rules, such as the auditor musthave a securities professional qualification. When a listed company was not satisfiedwith the audit services it purchased, it is likely to replace the auditor. Listedcompanies may have many reasons to change auditor, it may be reasonable, also itmay be based on the concern to his own interest. The audit derived from agencyproblems, which generally exists between the listed company owners andmanagement.And there is an agency relationship between the client and auditor whenthe client gave auditor the right to audit the financial report and correspondingremuneration. Therefore, when auditor implied the audit, it would involve theinterests of various parties.Then the audit become the focus of stakeholders andregulators. What the responsibilities of regulators is to take action to protect auditquality, promote the healthy development of the audit market, safeguard the interestsof investors. In reality, as management has a greater influence on the appointment andremuneration of the auditors, giving the management of listed companies a selectionto apply pressure on auditor so as to achieve its own intentions. When there is a bigdisagreement between management and the auditors of listed companies, tomanagement, changing the current auditor may be a good choice. Different managershave their own preferences and intentions, and different auditors have differentprofessional judgment and independence, so management could find the auditor inline with its interest. Thence, the behavior of listed company to make auditor switchmay jeopardize the quality of the audit. So this problem become the risk of regulatorsworry about, and is an important direction of a legitimate regulatory concerns, also isthe direction for researchers to explore. This paper continues to study this issue,furthermore this paper take the regulation change of CICPA in2011into account.Through empirical research, this paper found the following conclusions:1.auditor change will adversely affect audit quality, mainly in poor earnings qualityof financial reports provided by listed companies after the year auditor switch occurs,which lead to poor reliability of information;2.After the series of reforms went into implementation,it effectively suppress the adverse effects of auditor switch on auditquality, which showed in2011and2012,for the listed companies, which switchauditors, its’ degree of deterioration in earnings quality changes significantly reduced;3.Different types of auditor switch make different influence for audit quality, threetypes (downward change, the change between the small and the change up)willadversely affect the quality of the audit, and in these three changes, upward changearranged in the end (from the high degree of harm to the low degree of harm), but thechange between big auditor did no significant influence on audit quality, is the mostsecurity change;4.after the implementation of new regulation reforms, the overallaudit quality has improved, but for companies received non-clean opinion in theprecious fiscal year, there is no significant vestige. These reforms have an effect dueto CICPA improving their own work ability, standardizing content of the supervisionwork, detailing work program, greatly enhancing the efficiency. This paper arguesthat the CICPA should further enhance their service capabilities to provide moresupport for the auditor in face of client management, so that the auditor could moreeasily withstand pressure and maintain independence.