Research On Regulation Mode Of CPA Industry In China

Since the CPA system was restored in1980, China’s government has beencommitted to develop the industry of CPA.However, in recent years, the financialscandals of the accounting firm as rational economic man were exposed due to loweraudit quality and other reasons, which include audit fraud and audit failure. Thus,there was a tremendous credibility gap between the public and CPA and theaccounting firm. The reasons are mainly resulted from a series of problems of thegovernment regulation, beside the management defect of the accounting firm,including some CPA are lack of professional ethics, the accounting firm has problemsin the system of inner control and audit quality control.Energy giant Enron onceranked7th among the Global500filed for bankruptcy in2001. The countries allover the world took a series of measures to adjust the regulation model of nationalCPA industry, to strength the supervision of the CPA industry, especially in auditquality.Different from the regulation in other industries, the particularity of the CPAindustry focused on regulating the quality of the product, namely the practice qualityof the accounting firm. Therefore, the inspection and supervision of the practicequality is very important in the regulation of the CPA industry. In China, thesupervision model of the CAP’s audit quality changed to the government oriented andself-discipline as a supplement.Is it reasonable for our regulation model of auditquality? What are the practical problems in the model? How to solve the problems?Shall we learn from the experience of the western developed countries? Whichmodel shall we adopt and which is the optimal supervision model are the issue that wewill research.Based on the relevant theory of the government regulation, we concludethe most reasonable and the most suitable regulation model for our country’s CPAindustry from the angles of the practice quality inspection with comparing theindustry’s regulation model at home and abroad.Through the research of ourimportant government regulation departments and self-discipline organizations, thestatistics of the inspection and penalty of the practice quality of the accounting firm inrecent years, we conclude the problems of the regulation model of our CPA industryfrom the angle of the practice quality inspection. We put forward the proposals for improving the regulation model of the CPA industry and the efficiency of themanagement.