Internal Control Audit、Audit Market Concentration And Audit Quality

Since the 21 st century, frequent cases of financial fraud seriously harm the interests of investors, questioned the reliability of financial information. Behind the series of cases, all reasons related to the company’s internal control environment. So it is important to take some actions to improve the reliability of financial information. Sarbanes-Oxley Act is passed based on this purpose in the US in 2002, requires companies to release the internal control audit report with annual reports so as to further ensure the quality of financial information. The move caused the world’s attention, our country construct a system of internal control standards since 2006 step by step. From 2006 to 2013, our internal control standard system gradually perfected, transform internal control attestation into internal control audit. In this environment, our country’s audit market concentration have greatly improved between 7 years. Thus,whether the implementation of internal control audit in our country have reached the expected target? And under the condition of audit market, whether the audit quality is improved? As the level of audit concentration increases,whether the audit quality is improved by implementing internal control audit? These are all pressing problems, at the same time, the author tried to put forward some suggestions.Therefore, this article will use normative research method to carry on the theoretical derivation, and using the principal-agent theory, knowledge spillover effects, institutional change theory, information asymmetry theory, signaling theory, deep pockets theory and the SCP theory as the theoretical basis, so as to derive the three hypotheses, namely that perform internal control audit is conducive to the improvement of audit quality; the moderate concentration of audit market could improve audit quality; while in the audit market with high concentration,the implementation of internal control audit is more advantageous to improve the quality of audit. Then use the empirical analysis method to confirm hypothesis’ validity and use handling accrued profit as substitution variables of audit quality. In the process of institutional change from 2007 to 2013, use seven years of data to validate the three hypotheses respectively. The innovation of this paper lies in: there are few study on the data from 2007 to 2013, the time between the institutional change of internal control audit, and divide them into groups to analyze. Secondly, the existing research rarely take the audit market concentration as the factors of influencing the audit quality into consideration.Through theoretical analysis and hypothesis testing, this paper make the following conclusions: 1.Implementing internal control auditing can improve the quality of audit and in the voluntary internal control verification phase(2007-2009) and voluntary internal control audit stage(2010-2011), the execution of internal control auditing can improve the quality of auditing, to a certain extent, but the result is not significant, while in a mandatory internal control audit stage(2012-2013), the effect is significant; 2. Audit market concentration is conducive to improve audit quality; 3.While in the audit market with high concentration, implementing the internal control auditing can improve the quality of audit.Based on the above conclusions and combined with our present stage of the development of internal control audit, this paper puts forward some suggestions: 1.We should further standardize the internal control auditing system; 2. Perfect the internal control system; 3.We should effectively integrate the internal control audit and the financial statements audit; 4.To strengthen the quality of internal control auditing; 5.To strengthen the guidance and supervision of internal control audit services, so as to better ensure the healthy development of capital market, safeguard the interests of investors, ensure the reliability of financial information and to improve the quality of audit.