The Study Of Customer Flow Of Shenzhen Pengcheng Certified Public Accountants

In theory, a perfect market system should be able to procure the audit to improve the quality of the audit market. The quality of the audit market should be reflected in both supply and demand, the supply side from audit services-CPA’s perspective, ac counting firms have an incentive to provide high quality audit services. Improve the re levant industry and regulatory agencies punishment mechanism and reputation mecha nisms can promote the intention of accounting firm to provide the high-quality audit p roducts. Audit services from the demand side-listed companies, a listed company on the existence of demand for high quality audit service is an important performce of hi gh-quality audit market. In the case of CPA and CPA merger, the choice of accountin g firm provides an opportunity and perspective to study the demand for high-quality a uditReputation mechanism is an important mechanism to ensure the orderly operation of the market, compared to the legally binding mechanism, it is not only cheaper, but also to encourage CPAs to provide high quality audit services.In 2009, the fraud incident of Green Earth broke up,which is rampant fraud, infla ted income 296 million yuan, IPO fund-raising nearly 350 million.Public generally be lieves that the harsh nature of the green earth financial fraud seriously infringed the in terests of investors, and causing great losses to investors.From the establishment of th e green earth to IPO,the Shenzhen Pengcheng Certified Public Accountants is its audi tor for seven consecutive years that the Shenzhen Pengcheng Certified Public Accoun tants could not escape from the blame. This gives us a rare opportunity to research the customers flow aftet reputational damage. The purpose of this paper is to check the va lidity of the mechanism of reputation by the way of studying the customer flow of She nzhen Pengcheng Certified Public Accountants from 2008 to 2011, by analyzing the t hecustomer flow in the case of Shenzhen Pengcheng, this paper is committed to clarif y that whether the accounting firm change the disrepute Certified Public Accountants, and when it replaced, whether the market share of Shenzhen Pengcheng decline and i n Chinese audit market whether reputation mechanisms effective? And in the case of Shenzhen Pengcheng merges with Guofu Haohua, how the former customers of Sh enzheng Pengcheng choose the next Certified Public Accountants? By analyzing this question,we are trying our best to figure out the law that reflects the demand for high quality audit in Chinese audit market.The audit market supply and demand for high-q uality audits can reflect Chinese audit market problems, to solve these problem,this p aper puts forward some suggestions to refine and improve the system of audit in Chin a.In this paper,the names of customers of Shenzhen Pengcheng Certified Public Ac countants are collected by Wande database,the information of CPAs is obtained by t he annual report published on sina network.If there is some inconsistencies,this pap er is subject to the Company’s Annual Report published by the company. In this pap er,the full sample analysis of Shenzhen Pengcheng customers found that in the case of Shenzhen Pengcheng-Green Earth,with the continuous progress of the green eart h events,Shenzhen Pengcheng firm’s reputation suffered losses,some customers beg an to dismiss the Shenzhen Pengcheng,2009 there were five listed Companies that d ismissed Shenzhen Pengcheng,2010 there are seve,2011 there are nine,but the num ber of new customers is much more than the number of customers resignation, in 2009,Shenzhen Pengcheng have 10 new customers customers, in 2010 there are 33 new customers, in 2011 there are 12 new customers. As a measure of market share t he business volume Rank didn’t decline obviously,from 2009 to2011,the business v olume rank was 7,8,7. In the period from 2009 to 2011, the total annual income ofShenzhen Pengcheng is continuous improvement, in the AICPA National hundred CPA published rankings,from 2009 to2011 Shenzhen Pengcheng Certified Public A ccountants were ranked 44,34,33, except the period from 2008 to2009 the rank de clined, the period from 2009 to 2011 the rank was continuous improvement, as can be seen from this event, Shenzhen Pengcheng Certified Public Accountants apparent ly did not receive a direct punishment from customers. Auditor reputation mechanis m may fail in the Chinese audit market.2012 Shenzhen Pengcheng mergered with Guofu Haohua, the original client of Shenzhen Pengcheng Certified Public Accountants will be faced with the problem of re-selection. In 2011,Shenzhen Pengcheng Certified Public Accountants totally has 94 customers,the number of original customers of Shenzhen Pengcheng that select Crowe Horwath is a total of 60,then appoint Crowe Horwath customers accounted for 63.82%of the original Shenzhen Pengcheng customers.It is hardly to say that continue to choose to merge firms is a choice for high quality audit. By annual reports of Listed Companies,we can find the list name of Shenzhen Pengcheng Certified Public Accountants Auditors customers in 2011 and 2012,excluded four missing data,we found that in 90 customers,there are 51 listed companies to maintain cooperative relations with the former CPA (one person same),make up 56.67% of the total ratio. In other words,56.67% of the customers consider the inevitable factoris the CPA in the selection of the next house firm. In such situation,CPA’s independence has been questioned,and the quality of its audit firm is also questionable.Either directly select Merge CPA, or certified public accountant with "closely aligned", the audit did not reflect the market demand for high audit quality.Green Earth-Shenzhen Pengcheng incident did not reflect the formation of the effectiveness of the accounting firm’s reputation,and punishment mechanisms of related industry regulatory bodies have strong mechanisms lag,efforts are also lacking. Thus accounting firm lacks sufficient power to provide high quality audit services.For the above, there is insufficient quality audit requirements in Chinese audit market,CPA is too closely associated with the listed company,CPA reputation mechanisms may fail the punish of relevant industry organizations and regulatory mechanisms is inadequate,this paper put forward three suggestions to improve our auditing system: First,Promote demand for high quality audits. China should deepen reform, optimize the shareholding structure of the company, improve the corporate governance structure.Improve China’s securities market,Second, improve the independence of CPA, remodeling audit commissioned mode.Third,built a reputation information generation and smooth delivery channel.We recommend to establish a comprehensive and easy credit rating indicators used to measure the auditors and firms.We propose to publish the credit rating of auditors and audit institutions in the audit report, use a variety of media to strengthen the accounting firm’s reputation presentation and dissemination, and strengthen supervision of public opinion, a wide range of sectors to achieve social consensus for the reputation and recognitionFourth, improve the accounting firm of punishment mechanism.China should accelerate the establishment of legal action mechanism for violations of provisions to quantify and improve compliance costs and create a sound legal system, improve the punishment mechanism accounting firm.In this paper, there are some limitations.First, Shenzhen Pengcheng Certified Public Accountants is just a case study that not comprehensive enough. Second,data collection may be flawed.Third, the customer flow can not response the reputation mechanism of accounting firmcomprehensively.Given the limited level, there may be questionable place in the theory of knowledge and measurement methods.We hope that this article can provide a case to support the audit market demand and be able to contribute to the improvement of audit system.