An Empirical Study Of The Influence Of Non-audit Service On Audit Quality

Audit quality is the lifeline of the accounting firm and the foothold of it. With thecontinuous development of our economy, the accounting firm actively thinking about how todevelop a long-term development strategy, and developing new business areas to enhanceindustry competitiveness and survival ability, non-audit service plays a more and moreimportant role in the development of CPA firms. However, with the recent audit failure casescontinue to occur, the influence of non audit services on audit quality becomes the focus ofboth theory and practice circles.The paper uses the method of combining normative research and empirical research onthe impact of non audit services to audit quality of. First of all, the paper reviews relevantdomestic and foreign literature on non-audit services and audit quality from the two aspects ofthe CPA professional competence and independence. Secondly, the nature of non auditservices are described from the perspective of public goods and private goods, with principalagent theory, knowledge spillover effect theory and rent-seeking theory to analyze theinfluence of non audit services on audit quality, and further puts forward the hypothesis on thebasis of theoretical analysis. Finally, based on the2007-2012also disclosed to the accountingfirm’s audit fees and non-audit fees A shares of listing Corporation paid for the study sample,using the extended Jones model to calculate the discretionary accruals as a proxy for auditquality, and according to the two purposes of management authority transfer to high and lowearnings, will further it is divided into two sub samples from positive and negative aspects. Inthe control of the asset liability ratio, equity ratio, large change is "the big ten accountingfirms" and other variables, we use descriptive statistical analysis, correlation analysis, andmultiple regression to analyze. The empirical test shows that: in the whole sample and theabsolute number of positive samples, non audit services fees and the proportion of non auditservices fees have significantly negative correlation with discretionary accruals, which provesthat non audit services fees can be suppressed by earnings management audit clients; innegative samples, non audit services fees and the proportion of non audit services fees haveno significant correlation with discretionary accruals have, also found no impacts of non-auditservices on audit quality.The results of this study show that, the provision of non audit services to the customer’sprofit manipulation is more significant inhibitory effect. Although the provision of non auditservices to increase the development of CPA industry profit margins, but the premise of CPAwhile providing non audit services is that they should not damage the audit independence oraudit quality. Conclusion of this study provides empirical evidence of relationship betweennon audit services and audit quality, also provides guidance for the related departments toformulate development in line with China’s national conditions and the development of nonaudit services system of CPA.