Research On Administrative Regulation,Customer Importance And Audit Quality

In recent years,a lot of financial scandals are received by offices of Accounting firms which has promoted us to pay attention to the audit quality problems.Everything is influenced by the two aspects of internal and external factors.Therefore,keeping audit quality needs not only more external supervision of auditing industry but also to keep audit independence internally.The paper uses accounting firm which are punished by CSRC as the measurement of administrative regulatory variable and studies the change of audit quality of accounting branches before and after the punishment.It enables us to understand the effect of administrative punishment mechanism in our country more deeply.Further more,in order to explore the reasons why the quality of the audit is low,we further introduce customer importance factors to explore the relationship of administrative supervision,client importance and office audit quality.In this paper,we apply the combination on the theory of literature and empirical research method.As to the literature section,we discuss four aspects respectively in the literature review section on the second chapter of this essay.First,the relationship between the importance of the customer and audit quality.Second,the relationship between the administrative supervision and audit quality.Third,audit quality on the base of offices.Fourth,the instead indicator of audit quality.We obtained the following points by discussing the literature review,that is,the importance of customer relations and audit quality may be a positive relationship or negative relationship,which is subject to different selected sample,different period.Administrative supervision can be measured as a surrogate for firms with administrative punishment by the CSRC.From the study of our country on the base of offices,we found the audit quality of branches is lower than that of headquarters.After balancing all the pros and cons among audit quality indicators,we believe that earnings management can be more reasonable which is used as the representation of audit quality.We described the theoretical part in the third part.This chapter first introduces the regulatory background in China,including CPA regulation under Chinese government,management of accounting firms as well as offices.Second,we tried to anaylse in theory.we speculated the audit quality changes of audit accounting branches before and after punishment compared to the audit quality of other branches.We discuss the problem respectively.According to the branches which suffered punishment later,we discuss the problem from the motivation of reputation protection for offices.According to the branches which suffered punishment sooner,we discuss the problem from the litigation risk and administrative punishment.Further,in order to speculate the important role that client importance produces on the audit quality of accounting firm branches,we discuss the problem from the business selfish and the effect that important customers produce on the offices.As to empirical aspects,We selected 2009-2014 listed companies which are audited by the office as the sample and began to study the relations on the administrative supervision,the importance of customer and audit quality of branches.We applied listed companies accruals as a measure of the level of audit quality indicators and applied customer assets as a measure of the importance of the office audit client.whether the firm branches received the Commission Decision on punishment as a measure of administrative supervision indicators.We start empirical analysis of the relationship among the administrative supervision,the importance of customers and office audit quality by building 3 models.The results show that a year after being supervised,audit quality of illegal branches is significantly higher than that of other firm branches.By the year before regulation,the difference of audit quality of illegal branches and other branches is not obvious.In order to further explore the important factors that affect the audit quality of branches the year before regulation,we introduced the cross variables of client importance and administrative supervision.The results show that,in the year before being administrative supervised,with the control of other factors,the more intense the economy dependent that branches rely on the audit client,the lower the audit quality of branches.After making a conclusion,we proposed the corresponding improvement measures separately from the supervisions,CPA,reputation mechanism,office management.In the terms of administrative penalty,appropriate to increase the CPA violations penalties and broaden the punishment categories not only the implementation of administrative punishment but also the increasing number of criminal punishment.In terms of the CPA,there is need to improve the personal and professional skills and professionalism,so that they have the ability to voluntarily make efforts for the further development of audit.At the same time the relevant departments may formulate measures to improve the treatment of auditors,including higher material security not only on life aspects,but also on certain social status and reputation.Under the premise that it does not affect the enthusiasm of auditors,make their income and audited business decouple as far as possible to further enhance auditor independence and increase their capacity to resist external pressure,thereby further improving the quality of audit.In the terms of the construction of reputation mechanism,accelerate the construction pace of the accounting firm reputation,promote the firm scale,promote the integration risk and the quality management of unity of headquarters and branches and enhance their competitive strength,to play the role of reputation mechanism to lay a good foundation,improve the existing industry management system,guide market participants to establish the correct concept of audit quality demand.Strengthen the construction of occupational morals of CPAs,punish the accounting firm fraud and illegal CPA strictly to strengthen the role of reputation mechanism.In terms of branch management,innovative the regulation of Accounting Office such as carrying out the joint inspection among large number of offices,taking self-examination,the provincial finance department inspection,having a focus inspection by the Ministry of Finance.Loose branch management and implementation of key regulators,capture the doubt and make a deep research.