Book-tax Differences,Progress Of Marketization And Audit Fees

During the accounting information quality examination in 2015,91 accounting firms and 159 CPAs were punished.Part of the punished ones had the problems of vicious competiton and abnormal low audit fees.At present,the audit pricing system is defective.When negotiating the audit fees with clients,the accounting firm should take all factors which may lead to high audit risks into consideration,make reasonable plans,implement proper auditing procedures to ensure the quality of audit service.Book-tax differences(BTDs)are the differences between accounting income and taxable income,caused by the differences between the Accounting Standards for Business Enterprises and the Law of PRC on Enterprise Income Tax,reflecting the information of earnings management and tax avoidance,which can offer further information for auditors.Large BTDs may result in the decreasing of earnings quality,deterioration of business continuity,and the reduction of investment efficiency.All these changes may draw attention of tax auditors.However,investors can't understand the information of BTDs,bringing about investment loss.The progress of marketization is a concentrated expression of the institutional environment,and the outside environment of business operation and firm's audit,so it may have an important effect on audit risks and fees.Above all,this article does a research on the relationships between the BTDs and audit fees,the adjustment function of the progress of marketization,to provide references for accounting firms and supervision departments.This article is based on the data of A-share listed companies from 2010 to 2014,and studies the relationships between the BTDs and audit fees and the adjustment function of the progress of marketization,via descriptive statistics,correlation test and multiple linear regression.First,after combing and evaluation the relevant literature,the article analyses the effect the BTDs and the progress of marketization have on audit fees based on asymmetric information theory,signal transmission theory,reputation mechanism theory and "deep pocket" theory.According to the theoretical analyses,research hypotheses are raised.Second,to meet the research,variables are selected and measured.At the same time,multiple linear regression models are established according to the research hypotheses.Third,the Stata.ll is used to conduct multiple linear regression,and the empirical results are analyzed at last.The results show that the BTDs have a positive effect on audit fees.Furthermore,the large BTDs influence audit fees prominently,while the relationships between the small BTDs and audit fees is not prominent.Besides,the BTDs affect the positive abnormal audit fees linearly,but not the negative ones.The result means the BTDs will lead to more audit costs and higher audit risks,so the accounting firms will ask for more risk compensation.Moreover,the progress of marketization has a positive regulating effect on the relationships between the BTDs and audit fees.There are two innovation points here.In the first place,the article verifies the positive correlation between the BTDs and audit fees further.At present there are no scholars who study the correlations between the BTDs and audit fees.To perfect the existing research,this article studies this relationship in depth,finding that the lager the BTDs are,the more the positive abnormal audit fees.However,we do not find the linear relationship between the BTDs and the negative abnormal audit fees.In the next place,this article talks about the positive adjustment influence the progress of marketization has on the relationships between the BTDs and audit fees,which offers a new sight on theory research.