Critically Evaluate The Influences Of CAP Firms Merger On Audit Quality Through A Specific Case

Certified public accounting firms (CPA firms) could achieve the development whichpossess large scales during a short period through merger. The reason why the top fourinternational public accounting firms would attain current position owes to countlesshorizontal incorporative expansion to much extent. In China, public accounting industrywhich was reconstructed since1980s has experienced three times of the merger；it not simplycould accelerate the development of national accounting firms and promote thecomprehensive competitive ability meanwhile by incorporating. However, the merger ofChinese CPA firms is mainly unfolded by government. For the most part, the purpose of themerger is based on the official policy requirement or in order to achieve interrelated standards,the consolidations are blind more or less.Audit quality is not simply the measure of competitive cores but also the soul of theauditing profession. Merger is merely regarded as an instrumentality to expand market; nomatter what CPA firms do to accumulate capital, the final foothold is to improve cores of thecompetitive ability and professional ability. Whether the accumulative quantity couldultimately realize the qualitative leap or not, which has been always the focus of academicresearch and is also the point of the debate. Although the current correlation analyses on thefirms merger and audit quality have quite a few, the scholars have not formed unified researchopinions.This article selects China Audit Asia Pacific Certified Public Accountants which wasinvolved into the third phases of merger as the research object, critically evaluate therelationship between firm merger and audit quality. In this process of merger, China AuditAsia Pacific Certified Public Accountants adopt a measure of consolidation, simultaneously itis in accord with the characteristics of the merger under the leading of policies. Due to themerger process of China Audit Asia Pacific Certified Public Accountants run through threetimes amalgamation waves, it provided a plenty of academic reference values for furtherstudies like the influences of local accounting firm mergers. Therefore, this essay wouldcritically analyze the problems and solutions in the course of CPA firms merger through thecase of ChinaAudit Asia Pacific Certified PublicAccountants.This essay would take the methodology of combination between the specific cases andempirical studies to explore whether merger could make firms stronger on the basis ofexpanding or not. To establish the index system which uses earning management as majormethodology and which is assisted by modified audit opinions as another determinant, thus the report would investigate the variance in audit quality before and after the merger of ChinaAudit Asia Pacific Certified Public Accountants. The results showed that China Audit AsiaPacific Certified Public Accountants achieved the target of expanding in some extent,however, the audit quality was not able to be improved obviously at the same time. Thesituation was considered that the merger of Chinese CAP firms was leaded by localgovernment; in other word the action was not completely decided by market and the activitywas lacked of effective resource consolidation during the period. So, the article would supplysome pertinent advice in the aspect of improving audit quality.