CPA Firm’s Location And Its Audit Quality

With the stock market improving continuously, more and more audit needs to be made. The importance of accounting firms is increasingly well known by people, but the suspicion of people for audit quality of accounting firms is also increase. So, in order to improve the credibility of audit opinion and ensure the healthy sustainable development of the certified public accountants industry, analysis of influencing factors on the audit quality and implementing improvement become important especially.Most of the existing literature measure audit quality by the degree of earnings management such as the steerable profit, and a lot of them focus on the effects on the audit by the accounting firm scale, industry expertise, organization form, auditing term and so on. These achievement of research is beneficial guide effect on the development of accounting firm as well as the development direction of the company. What is more, these achievement also improves the audit quality and increases the confidence of investors. But scholars at home and abroad have a big differences for the relation between regional and audit quality. Most of them carry on research by using steerable surplus degree instead of audit quality and the empirical date of listed companies.Based on the inheriting predecessors’ research, this paper use the audit opinion type instead of audit quality. The study sample consisted of A-share listed companies in the data of 2012-2013 and companies in the data of 2008-2013 which were be penalized by China Securities Regulatory Commission, Ministry of Finance, the Shenzhen Stock Exchange and Shanghai Stock Exchange because of financial fraud. Combined with descriptive statistical analysis, empirical regression and robustness tests, for A-share listed companies, the relationship between CPA firm’s location and its audit quality is not significant. For companies with financial fraud, the local CPA’s firms are more tend to issue non-standard audit opinions, especially when the companies with financial fraud generates strongly continuity financial fraud and uses major omissions fraud means, this gap is more obvious. Non-local CPA’s firms establish local branch offices can help to improve the proportion of non-standard audit opinions. In addition, the smaller asset size fraud companies arc more inclined to choose non-local company.In the end, this article has reasonable excuse for the research results, and provides recommendation for regulators, accounting firms and enterprises by four aspects. These recommendations are:regulators and accounting firms should focus on hiring the small company of ecdemic firms; that big accounting firms can use an audit way combined local and ecdemic one. In addition, in the aspect of enterprise information disclosure, the article also put forward own views and gives corresponding advice.