Fair Value Measurement, Corporate Characteristics And Audit Fees Research

Specific meaning of the audit fee is to charge of a certain amount of service fees (include the cost of the audit service fee) from the service object (the audit units) after audit services (CPA) finishing the completion of audit service. Generally, academic circles recognition of audit fee covers four parts, such as payment, cost, time and cost structure. The reasons why the scholars pay close attention to the influence factors of audit fee issue is that the cost lines and cost structure has a lot of variability, it represents the peer value of independent audit service provided by certified public accountants, and it is associated with audit service quality. International scholars had carried on the thorough research for the quantitative problem of audit fees, but early research almost focuses on the theoretical analysis, lacking of the support of empirical conclusions. The earliest real empirical study began in 1980. Simunic used the multivariate linear regression model to carry on the empirical research on the factors that may affect audit fees. His research showed that the customer’s asset scale, the scope of business, return on equity, the types of audit opinion in significant correlation with audit fees. In 2001, China promulgated the "company information disclosure of securities for public issuance specification quiz# 6-pay accounting firm,and its disclosure, it has adjusted the content of the information disclosure of listed companies. This file stipulates that audit fee must be disclosed as the often affairs in the listed company financial statements every year later. The disclosure of this data laid a powerful information support for the development of internal audit fee empirical research.Since 2006, the promulgation and implementation of new accounting standards fully expand the application fields of the fair value measurement method in our country. The fair value measurement model has a better value relevance in terms of the historical cost model, but it is controversial in terms of reliability and authenticity. Audit work has played a very important role to improve the reliability of accounting information, and to some extent, the amount of audit fees will also represents the auditor’s professional lever and the quality of service. Therefore, in terms of the present actual situation, the problem that whether the use of fair value measurement model would cause the change of audit fees is an urgent problem in academia. If profits or losses of fair value will change the audit fee standards, what is the audit cost variations under the background of different enterprise characteristics. The solution of these problems will help market interest group recognize the fair value measurement model better, and help maintain accounting industry practice purposes, and for managers, investors and regulators are also of great significance. In our paper, I regard the Chinese listed companies’relevant data which annual financial statements contain the item "profits or losses of fair value" and have the full financial disclosure of audit fees statistics information from 2008 to 2014. We establish DID model taking example by Simunic’s audit pricing model. This model regards profits or losses of fair value, total assets scale and corporate profitability as correlated variables carries out the natural experiment on the basis of the new accounting standards to study the correlation between the fair value pattern, the enterprise characteristics and audit fees under the new accounting standards.We found that listed companies which use fair value model for measuring will not necessarily cause the increasing of audit expense. However, in the historical cost model, relatively poor company will operate the audit process in order to reduce the audit fee, it seems to reduce the audit cost, actually increases the audit risk and indirectly causes the increase of audit fees. The bigger the assets are, the more difficult the company’s audit is, the more complex the program is, and the higher the audit fee is, so the more difficult the fair value measurement accuracy is. The behavior that listed companies put the fair value on the balance sheet can more lead to regulators and investors’attention, what the companies do will increase the auditor responsibilities in the audit work and increase the audit fees. The more frequently in the process of production and operation of listed companies to use fair value measurement, the higher the standardization of the audit process is, the simpler the program is, the less the audit costs. Overseas studies have shown that enterprise external auditors can not only reduce audit risk but also reduce the audit cost. And this conclusion is not consistent with the result of our article. In addition, according to the above results, the paper further analyzes its reasons, and puts forward corresponding policies and Suggestions.The innovation of this article mainly includes two aspects:First:Compared with the old accounting standards, the new accounting standards is optimized in many ways, such as the new accounting standards made specific provision on the content and category of audit of auditors. In general, the fair value of the company has four basic attributes:the complexity when evaluating the fair value, the judgment of the fair value, the publishing of the fair value and external customer feedback after using. The new accounting standards require assessing and reviewing these four attributes. We can see the influence on audit fees through the analysis of these four kinds of attributes. Second, it has great difference in the aspect of audit fees between the fair value and the historical cost model, we select two companies which use different measurement model in order to analyses their difference on the audit fees. In addition, we choose the size of the company and profitability as two variables for analysis.