The Effect Of Integrated Auditing On Audit Fees Over Financial Statement

Accounting firms and entities have been paying attention to audit pricing for finance statements in the audit business all the time. In April 2010, China Ministry of Finance, China Securities Regulatory Commission and other three ministries jointly released a series of documents to evaluate implement and audit internal control. Meanwhile, one of these files states that CPAs could implement audit of internal control separately or integrated with audit of finance statement in the Audit guidelines for enterprise internal control. Going with the development of internal control, integrated auditing, which means that a company hires the same accounting firms to audit its finance statement and internal control at the same time, has came into china Capital market and affected companies’ audit purchase behavior. Different from mandatory integrated auditing oversea, such the policy of voluntary integrated auditing offers a new background and opportunity for study and test the effect of integrated auditing on audit pricing for finance report.This article is based upon information and data of Chinese A-shared listed entities in fiscal year of 2012 and 2013 and tries to research the influence of integrated auditing on audit pricing over financial statements, under the new regulation by positive analysis. We saw signs of that the integrated auditing was significantly negative correlation with audit pricing for financial statements. It refers that the companies with integrated auditing have lower audit fees for financial statements, compared to companies without integrated auditing. Also, we found that state-owned enterprises with integrated auditing have a significant influence on audit fees over finance statements. But other enterprises with integrated auditing didn’t go to the same outcome. On further analysis, 80.6% of state-owned enterprises with integrated auditing disclosed their fees for internal control auditing. But 31.8% of other enterprises with integrated auditing didn’t publish their audit pricing for internal control. This meant that without payment, CPAs might not really do the audit efforts even thought they disclosed the report on the effectiveness of internal control. So the auditing of internal control in form rather than in essence impeded the synergistic effect of integrated auditing and leaded no significantly decrease in audit fees. Maybe this was why the negative effect of integrated auditing on audit pricing was not significant statistically between the state-owned enterprises and other enterprises.On the one hand, this article could reorganize the development of integrated auditing and enrich the empirical research of integrated auditing. On the other hand, it could inspect that how integrated auditing is used in Chinese capital market. At the same time, it also could complement the influence factors of audit pricing over financial statements. The results of this article could be theoretically and practically significative of making regulation, investing, purchasing decisions for departments, publics and companies.