Research On The Influence Of Administraitive Penalty On Accountnting Firms’ Audit

The government dominates the recovery and development of the audit system. The supervision of the audit industry is charged by the government, and the industry self-regulation is the supplement. Compared with the western countries’ civil compensation, China’s main punishment of accounting firms and CPA is administrative penalty. Whether it is effective or not, will directly affect the development of the audit industry. Although there have been some literature on the effectiveness of the administrative penalty is discussed, but not yet reached a consensus, and there is few study of the repeated punishment. This paper will take accounting firms administratively punished by the securities and Futures Commission as the research object, to further verify the effectiveness of administrative penalty, in order to provide government a theoretical basis for the revise of "registered accountant law" and relevant regulations.This paper reviews the relevant literature on administrative supervision, administrative penalty on accounting firms’audit and the reputation mechanism. It analyzes the statistical data of the SFC’s administrative penalty and explains the reasons of administrative penalty taking priority in accounting firms’punishment from the perspective of government, CPA, social public and civil compensation system. On the basis, it comes up with the research hypothesis of the administrative penalty to the accounting firms’audit client, the audit fees, the audit quality, in two cases of the initial penalty and the repeated punishment. We take unpunished accounting firms as a control group, analyzes punished firms’change in the number of customers. We use listed companies audited by punished accounting firm as sample data, and respectively take audit fee’s logarithm and DA as dependent variables and administrative penalty as independent variable, to examine the changes of audit fee and audit quality before and after penalty.Results show that whether the initial punishment or repeated punishment, administrative penalty will have a certain impact to the accounting firm but the effect is small; Punished accounting firm’s audit fee levels did not decline significantly; administrative penalty have no significant effect to audit quality. Therefore, this paper draws the conclusion that the administrative penalty can not significantly affect accounting firms’audit. The effectiveness of the administrative penalty is not enough, the administrative penalty system in the intensity, way, penalty basis, still need to be improved. According to the conclusions, we puts forward the relevant suggestions to improve the administrative penalty system, the repeated punishment should be especially strict.