An Empirical Study Of Auditor Industry Specialization, Audit Fee And Audit Quality

The competition in audit industry is becoming increasingly fierce along with the increasingly complex of audit service, which raises the requirement for auditors. In order to improve the competitiveness of certified public accounting(CPA) firm in China, the government promulgated a series of policies and regulations to guide CPA firms achieve the goals to become bigger and stronger by means of merge. On the other hand, auditors begin to improve their own professional skills then enhance their own competitiveness. Therefore, the research on auditor industry expertise were paid more and more attention by Chinese and foreign scholars.The auditor industry expertise is one of the most important parts in their professional skills, the formation of industry expertise will enhance the practice ability and improve the audit efficiency at the same time. For the overall audit market, the most concerned thing of auditor and audited firm is audit quality and audit fee. The effect on audit quality by auditor industry expertise not only reflect the professional competence, but also affect audit fee, then act on the resource investment and independence of audit office.Based on the research of the auditor industry expertise, relationship between auditor industry expertise and audit fee or audit quality, theoretical analysis and empirical research were combined in this paper, first, study the meaning of audit industry expertise and its motivation, second, propose hypothesis and build models on the basis of theoretical analysis through descriptive statistical analysis, pearson correlation test, multiple regression analysis to analysis the effect on audit quality and audit fee by auditor industry expertise. Evidences were found to prove the positive correlation between auditor industry expertise and audit fee through model test, which means auditor industry expertise brings a premium of audit fee. Replacing audit quality with absolute value of discretionary accrual profit, negative correlation between auditor industry expertise and audit quality was proved, which means the improvement of auditor industry expertise is not good for the improvement of audit quality. Through analysis, the reason is that audit market in china is still at the primary stage of development, institutions and policies are not perfect, audit mark is lack of the real needs of high audit quality.