Non-recurring Profit And Loss Nature, Accounting Firm Size And Audit Strategy Differences

Earnings management has always been one of the core issues of accounting practice and academic field.With the market economic system reform,the Party and the government has introduced a series of measures about the development of the non-public sector of the economy,encouraging,supporting and guiding the development of private enterprises.So far,China has appeared a number of strong, larger-scale listed private enterprises.In fact, many of the listed private enterprises don't have very high earnings quality.They often uses various means of earnings manage in order to meet the listing requirements or achieve other interest objectives.Infrequent Earning(IE) has become one of important means of earnings management activities of the listed corporation.Since the provisions of China Securities Regulatory Commission for IE items is used by means of example, it contains different content and form.So the means of the use of the listed corporation are diversified.Therefore,the independent external accounting firms should be able to identify IE items' behavior.The paper uses 2006-2014 listed private enterprises of computer, communications and other electronic equipment manufacturing industry as the research object.The paper uses the method of combing normative and empirical research to study on generalized earnings management behavior.It analyzes IE and IE items of listed private enterprises in China how to influence the strategies of accounting firms.At first,the paper respectively analyzes IE?accounting firm size and audit strategy of all samples.Second,the paper analyzes IE items?accounting firm size and audit strategy.The paper found that accounting firms are able to identify listed private enterprises' IE of earnings management behavior, and charge higher audit fee and strict audit opinion issued.With the expansion of the size of the accounting firm, they may charge higher audit fee and issuing more stringent audit opinion.For IE items,audit fee charged by accounting firms is positively related to IE items, and audit opinion issued by accounting firms is not related to IE items.But with the expansion of the size of accounting firms, compared to the small size of accounting firms, a large scale of accounting firms will charge higher audit fee and issue a more rigorous audit opinion.This reminds relevant departments to regulate IE items ridiculous frequently.At the same time, accounting firms should continue to improve their own professional and technical ability in order to accurately identify earnings management behavior of listed companies to charge appropriate audit fee and to provide relevant information users with an objective audit opinion.