Case Study On Determinants Of Sharing A Common Auditor With Clients

The rapid market economic growth has drawn the public increasing attention to auditing work of listed companies. However, a number of financial fraud cases occurred in recent years has resulted stakeholders decreasing trust on auditing quality of listed companies, which has adversely impacted sound and stable development in capital market.How to ameliorate auditing quality becomes an urgent problem that need to be treated without any delay and sparks a wide range of research on factors influence the auditing quality among scholars at home and abroad. On the basis of factors in existence, a new mode of sharing auditor with customers in supply chain was analyzed in this report. The study of whether the auditing quality can be improved by sharing auditor and of what the determinants prompt suppliers to do so is conducive to listed companies for new ideals to enhance their auditing quality.This report follows the principle of match properties, based on the empirical research materials from a paper entitled “Can Sharing a Common Auditor Reduce Financial Restatements of Firms?---- Evidence from Chinese Listed Companies”, choosing the companies sharing auditors with customers and don't do so as the objects of study. Then,the illustration on conceptual model and analysis of an comparison between companies share auditors and don't share shows possibility of financial restatement can be notably reduced and better criterion attribute in earnings management degree, audit fees and market response through sharing auditors, which demonstrate it can enhance the auditing quality. The Grounded Theory is adopted to explore the determinants of sharing auditors with customers by coding the raw data into three levels and establishing conceptual model of determined co-auditing. It finds that, based on strategic development, suppliers have strong demands in auditing quality, convenience and efficiency, and trust from customers,and they therefore incline to share auditors with customers. Last but not least, this reportsuggest to ameliorate milieu of auditing and improve auditing quality by building shared auditors system.