A Research On The Influence Of Administrative Penalty On Audit Opinions And Audit Fees

With the development of the capital market,the demand for audit is become more urgent.Audit plays a more and more important role in improving the quality of information in capital markets,but the characteristics of the CPA profession have may led to the possibility of audit failure.The frequent occurrence of accountant cheats and audit failure associated have disrupted the order of the capital market and caused huge loss to investors.Countries have taken measures to improve audit quality by strengthening supervision.The regulation in China has gone through four stages,and now the government is playing the most important role and the self-regulation is playing a strictly subsidiary role.The government tries to improve legal risk to improve audit quality and bases on administrative punishment mainly.Theoretically,administrative punishment can improve audit quality by the mechanism of reputation,the mechanism of deterrence and education and the mechanism of supervisory.But in our country,administrative punishment can't bring a huge loss,and whether administrative punishment can improve audit quality has become the concerned topic of investors and stakeholders.Taking the listed firms whose auditors have been punished in 2001-2013 as the sample,this paper examines the impact of audit penalties on audit opinion types and audit fees.The research results show that,the possibility of companies receiving modified audit pinions shows a downward trend and the audit fee shows an upward trend.With those companies whose auditors were not punished as paired samples,we found that there was no significant difference between the two groups of samples in the probability of receiving modified audit opinions and audit fees.The samples were further subdivided according to the firm size and the severity of the punishment,and similar findings exist.The study shows that the regulatory authorities have not significantly improved the audit quality,and the market has not given special penalties to the public auditors that have been damaged by the reputation.In the Chinese audit market in transition economy,the government should improve the effectiveness of the administrative supervision,the regulatory method needs to be improved,and the supervision should be strengthened.