Exploring The Association Between Audit And Organizational Financial Performance In Foundations

The charitable foundation in China continue to grow with the increasing of income level and awakening of charitable consciousness.It alleviates the pressure of government public expenditure and promotes the social harmony to a great extent.However,with the enlarging of charitable foundations' and the enhancing of influence,the problems have been gradually exposed.Recently,plenty of negative news expose that there is a huge problem in the use of capital.It has affected the credibility of foundation.The public start to questioning the integrity of charitable foundations and asking charitable foundations to disclose the situation of financial performance,including financial conditions,public welfare spending and operating results.As an important external supervision mechanism,the role of external audit to normalize the operating of charitable foundation has attracted more and more attention.The Chinese institute of certified public accountants issued "the guidelines of foundation's statements audit "to strengthen external audit's guidelines for the charitable foundation's work of financial statements audit.It standardizes the charitable foundation's financial statements audit and special business audit,which ensure the quality of the foundation audit practice greatly,and is advantageous to help the certified public accountants industry to service welfare undertakings better.At the same time,it also makes the effect of external audit financial performance for charity foundations more significant,which provides a more solid basic for the research of this paper.This article combines the method of normative research and empirical research.It selects foundations which disclose the work report in China folk organization administration in 2015 as the sample and uses factor analysis method to build the charity foundation financial performance evaluation system according to the foundation of domestic and foreign research.Finally,the paper analysis whether external can affect the financial performance of foundations and how external audit affect the financial performance of foundations.Through the empirical test,the paper draws the conclusion.(1)big 100 accounting firms is a proxy variable of high audit quality,it can play a significant effect on the financial performance of charity foundations.Big50 accounting firms will affect the financial performance of charity foundations more significantly through the higher reputation and better audit quality.(2)External audit has an impact on financial performance of charity foundations by influencing the donation dependence.The main innovation of this paper is:(1)The paper build a more applicable financial performance evaluation system for charitable foundations based on the characteristics of Chinese charitable foundations.(2)The article explores the association between external audit and financial performance of charity foundations,which will help the charitable foundations to breakthrough "capital constraints" and provides a new perspective to improve financial supervision,management level and ability of sustainable development of charity foundations.(3)Recently,the research on charitable foundations in China is mainly from the perspective of theoretical research.The paper uses the method of empirical research to enriches and develops the related research of charity foundations.