Research On The Effectiveness Of Evaluation Index Of Independent Audit Quality

With the increasing development of country’s economic, the complexity of economic activity between companies is increasing, and independent audit has played an irreplaceable role in the regulation of market economy. Effective audit can correctly guide investors to avoid investment failure because of the emergence of false financial reports lead, so the importance of audit quality as the core of the independent audit is self-evident. Audit quality has special properties such as invisibility and non-measurability, while the oversight of the audit firm from industry regulator authorities often have certain hysteresis. These are making it difficult for investors to distinguish the level of the CPA audit quality. Whether to select a series of representative indicators to evaluate the audit quality has become the focus of the theoretical and practical circles. For this purpose, the article did some research on the evaluation of audit quality.There are many factors that affect the quality of audits, and articles select three indicators including audit fees, the firm’s industry expertise and audit market concentration from the point of audit quality’s core definition which contains the independence and professional competence. And about date collection, the article select fraud companies of A-shares as sample with a unique perspective, and then test the effectiveness of these indicators. After reading large amounts literature and doing plenty of theoretical analysis, the paper proposes three assumptions:1, audit fees and audit quality has a positive correlation, low audit fees is not conducive to benign development of CPA, and more is not conducive to improve audit quality;2, highly concentrated audit market can make the firm to effectively resist external forces pressure, enhance the independence of the firm, and is conducive to improve audit quality;3, the development of the firm’s industry expertise will help to improve the independent audit quality.The article select types of audit opinion of fraud listed company as audit quality alternative variables, because these variables can effectively reflect the audit practicing quality, and then the paper use the Logistic regression model to test the assumptions. The empirical analysis results have verified the three assumptions proposing by the paper.Finally, the article considers that the industry regulatory authorities should take effective measures to restrain cheap charges in order to guarantee the quality of the independent audit, at the same time audit firm should continue to enlarge and strengthen under the premise of the audit quality, make efforts to develop industry expertise and to build brand characteristics. This will in turn promote the enhancement of independent audit quality, form a positive interaction, thereby promoting the healthy development of China’s CPA industry.