The Conversion Of The Organization Form Of Accounting Firm And Its Influence On Audit Quality

The accounting firm as a special type of enterprises in our country has two kindsof forms of organization, partnership and limited liability, in practice, most firmspreviously used is the limited responsibility system. In2010July, the Ministry ofFinance and the State Administration Bureau jointly issued the "Interim Provisions"on the promotion of the large scale accounting firms adopt the special generalpartnership, the requirements of large accounting firms in2010before December31,for the conversion of special general partnership organization; encouragemedium-sized CPA firm in December31,2011for the restructuring of the specialgeneral partnership organization form. In this case, accounting firms in China havebeen restructured in response to the call.In the special general partnership, a firm or a few partner because the intent ormajor negligence firm loss, need to assume unlimited liability or unlimited joint andseveral liability for the debt, the other not negligent partners with limited liabilitypartnership; partner firm debt caused by non intentional misconduct or grossnegligence, all partnership per capita shall bear unlimited joint and several liability.From this perspective, the transformation of firm organization form increased legalliability on partners. In order to reduce litigation risk, registered accountants havemore motivation to keep more independence in the audit process, pay more efforts toimprove the quality of audit. However, in practice, litigation risk of Certified PublicAccountants in our country is particularly low, in this case, the transformation of firmorganization form can really bring audit to improve the quality of unknown.In this paper, the study use the type proxy for audit quality, effects on the qualityof audit firms to transform from two horizontal and vertical angle. Transverse refers tothe control of other factors under the same conditions, research has shifted to whetherthere is a significant difference in the special general partnership firms and nontransformation firm audit quality; longitudinal is the firm in the transformation beforeand after a year audit quality if there is significant difference. The results of the study found that both from the horizontal or vertical research, have no evidence to show thatthe transformation of the accounting firm can significantly improve the quality ofaudit.Through empirical test, we conclude that the transformation of the accountingfirm audit quality and had no significant effect on the conclusion, the reason, we weresummarized from the following aspects: one is by far, firms to transform the time isshort, the learning effect on risk awareness is not sufficient; the two is China’s lack ofclear law system to guarantee the civil litigation, audit after the failure of the at thesame time, the legal consciousness of the outside investors is weak; the third is thelack of an effective system of internal control within the firm, restructuring themanagement more confusion, cultural reconstruction ability is insufficient, thissituation will also significantly improve audit quality can not be transformed by. Inaddition, in China’s capital market, not all firms are to be transferred to the specialgeneral partnership, to see whether the firm existing forms of organizationdevelopment good, whether can promote the firm bigger and stronger.