Study On The Effects Of Internal Control Quality Over Auditing Fees

Audit fees are consistent prices that both sides of audit service agreed and the audit service was provided by audit entities. Audit service could be implemented and finished through CPA’s audit work, such as compiling audit plan, implementing audit procedures, applying audit judgments, drawing audit conclusions and issuing the audit reports. In addition to considering the supply and demand relation, audit fees must reflect the laws and characteristics of audit service, in order to guarantee that the high quality of audit reports. Therefore, audit pricing has been the research hot spot by international and domestic scholars. More and more experts and scholars devote themselves to this research. Since2001, China Securities Regulatory Commission requires listed company disclosure the audit fees. Thus, when it comes to factors that influence the audit fees, domestic scholars has began to do plenty of researches. As for fundamental influential factors, such as the operation scale of listed company, the complexity of audit service, the characteristics of accounting firms and audit opinion, they have obtained relatively results. With the rapid development and improvement of our national economy, academia plans to explore and research new influential factors, such as corporate governance, earnings management, audit alteration and risk premium.With the gradually improvement of our country internal control system and the progressively standardization of market, many scholars have focused on the internal control quality, which affects the audit fees. Meanwhile, internal control in the enterprises becomes more and more valued. However, when it comes to do research, few people included the internal control quality studies in the audit-pricing model. The mainly reasons are that acquiring internal control quality and related data are relatively difficult. Therefore, this thesis chooses internal control quality as entry point. Meanwhile, based on Dibo’s internal control and risk management data information and listed company internal control rating standard, this thesis ranks them in order and group, and thus in order to research the effect of internal control quality on audit fees.The main research area of this thesis could be divided into two parts, which are theoretical analysis and empirical research. The theoretical analysis part is part one to part three. Based on categorizing and reviewing domestic and foreign literature, and after confirming the relevant concepts of internal cost control and audit fees, this thesis combines the cost benefit principle, principal agent theory and cost " agglutinant" and thus raises out quality of internal control’s path of audit fees, which provides theoretical support for the thesis’s writing and proposition of hypotheses.In the empirical research part, which is part four to part six. First it rises out research assumption based on theory analysis that internal control quality and audit fees correlation is negative. This thesis selects1056listed companies of China in2012as research sample and chooses Dibo internal control index as substitution variable of internal control quality, and thus conducts descriptive analysis, multiple regression analysis and robustness test on assumptions. The results show that there is a negative correlation between internal control quality and audit fees, but this relation only applies to the low internal control quality situation. Subsequently, precede group assignment towards listed company internal control index in2011and2010, and then compare the internal control quality. Consequently, research the effect of internal control quality change on audit fees. Research shows that internal control quality goes down and audit fees go up.By means of the theoretical analysis and empirical research of the relationship between internal control quality and audit fees, this thesis identifies the factors that affect measurement standard of internal control quality and audit fees, which is the basis of related theoretical research. Besides, this thesis tests and verifies the influence of internal control quality on audit fees, and enriches the related theory of effect of internal control quality on audit fees, which provides new experience and evidence for related problem research Consequently, it contributes to the establishment of CPA audit decision and enterprise internal control system. Meanwhile, it provides theoretical foundation and evidence for the supervision of capital market, which is beneficial.