The Characteristics Of Ultimate Controller?Internal Control Quality And Audit Fees

The negative news of accounting firms low price bidding the audit project has aroused widespread concern in society,and the normality of audit pricing has been challenged.Audit fees is the bond between the company being audited and the accounting firm,normalizing audit fees standards will benefit the healthy and orderly development of audit market and optimal allocation of resources of capital markets.Simunic(1980)innovatively proposed classic audit fees model,which says that audit fees are made up by audit cost and audit risk.Later scholars have continuously extended audit cost factor on the basis.As the construction of internal control system gradually standardized,the level of quality of internal control influence audit costs or not has become the priority of a part of the researcher.However there are less people study on the relationship of the characteristics of ultimate controller and the audit fees.Based on audit pricing determinants theory,principal-agent theory,information asymmetry theory and signaling theory,this paper analyzed the inner connection among characteristics of ultimate controller,the quality of internal control and audit fees.Looking forward to further enrich empirical evidence of the relation between quality of internal control and audit fees,and promote audit pricing reasonably.This paper comb the relevant literature about the ultimate controller features and the audit fees,the quality of internal control and audit fees at home and abroad,then described the current research situation worldwide,finally came up with hypothesis based on theoretical analysis.According to empirical studies,we have found that:(1)Quality of internal control and audit fees had a significant negative correlation.(2)Adding property analysis to it,we get a conclusion that the negative correlation of internal control quality and audit fees in non-government-controlled listed companies is more significant.(3)The rate of control proportion of the ultimate controller and audit fees has a u-shaped relationship.(4)Increasing the rate of control proportion of ultimate controller would significantly weaken negative correlation between quality of internal control and audit fees.(5)In the study of sample points,the negative correlation between the rate of control proportion and audit fees is more obvious in low level of quality of internal control.The negative correlation between quality of internal control and audit fees is more apparent in a higher rate of control proportion.This paper puts forward some policy suggestions based on the above conclusions has a certain significance on raising the quality of internal control of the company,restricting and improving the bad behavior of controller,and overcoming the randomness of present pricing model of audit profession as well as improving the efficiency of audit work.However,this paper only selects 2012-2014 year in Shanghai and Shenzhen A shares of listing Corporation as the research sample,the applicability of the other samples still remains to be further tested.