Study On The Correlation Between Fair Value And Audit Fees

The outbreak of financial crisis makes people begin to care about fair value. On the one hand, it is a big step forward on the international convergence road for new accounting standards to promote fair value measurement. On the other hand, it is also bringing new research subjects to the auditing theory and practice. The complexity of fair value measurement method, especially when using valuation techniques in the case of direct or indirect market observed value cannot be obtained, greatly increase audit cost and audit risk of CPA. With the deepening and perfection of market economic system, the use of fair value measurement will be more and more widely. Exploring the relationship between audit fees and fair value can not only enrich the research on fair value measurement, but also expand the category of audit fees study. This topic has certain theoretical and practical significance.Following the classic audit pricing model of Simunic, the author chooses listed companies with disclosed audit fees in Shanghai and Shenzhen A-share of 2010-2014 excluding the financial sector to study the correlation between changes in fair value gains and losses, assets impairment losses and audit fees. At the same time, whether the correlation will change has been verified before and after the issue of fair value measurement draft and the implementation of fair value measurement in the new accounting standards. By using literature analysis method, qualitative research method and quantitative method, combing related literature at home and abroad, as well as analyzing on the four relevant theories such as risk-oriented audit, cost-effectiveness, risk premium and information asymmetry, the author put forward to three hypotheses. The empirical part includes descriptive statistical analysis, correlation test, multiple linear regression analysis and robustness test.The results of empirical study indicate that changes in fair value gains and losses cannot affect audit fees of listed companies, but asset impairment losses have significant positive influence on audit fees. Besides, the issue of fair value measurement draft in 2012 and the implementation of new accounting standards for enterprises in 2014, do not change the conclusion between changes in fair value gains and losses and audit fees. After analyzing the reasons of the empirical conclusions, the author proposes several corresponding suggestions to perfect fair value audit in our country as following: perfecting the theories and methods of fair value audit, bettering China’s market environment and economy system, strengthening the supervision of the certified public accountants industry, promoting the development of the third party of fair value appraisal institutions and improving fair value audit professional skills of auditors.The first innovation of research on the correlation of fair value measurement and audit fees is the research angle. From the perspective of fair value, it expands the research on the influence factors of audit fees. The second innovation is the research design. In the process of research, the third research hypothesis is designed to test that a series of changes which are related to the fair value in the accounting standards for enterprises have notable influence on audit fees.