Integrated Audit And Audit Quality

In recent years, financial fraud incident of some famous companies in the United States capital market shocked the world, which prompted regulators to establish and perfect the relevant legal system of internal control audit.In July 2002, the United States congress and the administration promulgated the SOX act, make internal control auditing ascend to the height of the legal system. Since then, the public company accounting oversight board(PCAOB) issued, respectively, AS NO.2 and AS NO.5,in March 2004 and May 2004, to improve various specific problems encountered in the process of law execution. Among them, the integration of audit was put forward in AS NO. 5 for the first time. Reference to the SOX act, the ministry of finance in our country and other five ministries jointly issued "enterprise internal control basic norms" in May 2008, and published "the enterprise internal control audit guidelines " in April 2010, which mentioned the integration of audit and pointed out that the integration of internal control audit and financial statement audit can improve the efficiency of the audit. Unlike American, integration of audit in our country is not mandatory. Since 2012, there were quite a number of enterprises which implemented integrated audit according to the guidelines recommend, but there were also part of listed companies which chose the separated audit, and there is a situation which some companies choose integrated audit at first year, but the following year they choose the separated audit. So the question comes, compared to the United States, whether some factors such as China’s legal environment, audit technology and the quality of internal control of listed companies have meet the requirement of integration of audit? The forced integration of audit of the U.S. can be copied to our country? Obviously, whether to choose mandatory integrated audit, the standard is audit quality.If the implementation of integrated audit can improve the quality of auditing, we should implement integrated audit.Otherwise, integration should not be forced.Reviewing of the literature,we found that academic research on integrated audit influence on audit quality is still stay on the normative research stage, this paper tries to use the method of empirical research on the analysis of the effect of implementing integrated audit to audit quality. Based on China’s Shanghai and shenzhen two city,we take 902 companies in 2012 and 1094 companies in 2013,which implemented internal control audit and whose audit results are the standard audit opinion as research samples, accounting conservatism as substitution variable of audit quality, empirically examine the implementation of integrated audit influence on audit quality. Results show that there is a significant positive correlation relationship between separated audit and accounting conservatism. This suggests that, compared to the implementation of integrated audit, the listed company who implemented the separated audit has stronger robustness in its accounting information after the audit of financial statements of financial. At the same time, the results also show that compared to 2013, the regression results of 2012 samples show that the implementation of the integration of audit on the improvement of accounting conservatism degree is bigger. In addition, according to some index such as the company size, number of subsidiaries, we separate the sample for regression, the results show that the sample group which the size is smaller or the number of subsidiary company is more, the implementation of the separated audit increase accounting robustness greater. This shows that the difference of the internal control of the company, implement the separated audit can improve accounting more robustness. According to the results, it is recommended that 1,the regulators should further perfect the relevant legal system; 2,According firms should improve the internal control auditing technology and consummate system of quality control of related business; 3,The listed companies should to improve the quality of internal control for the first priority, also should fully consider cost and benefit when weighing whether to implement integrated audit.