Is The Successor Auditors Maintain Moderate Conservatism?

At present,the phenomenon of auditor switch in capital market is not uncommon.Although auditors and listed companies are reluctant to explain the reason,external investors and government regulators are quite concerned about that if the listed companies use auditor switch to meet the purpose of opportunistic behavior.More specifically,there are risks in the following two areas: on the one hand,when the auditor identifies the client's risk of material misstatements,the auditor may ask the client to adjust financial statements and related matters to reduce the risk.Once the client refuse to make adjustments,it may cause the auditor to issue a more severe audit opinion,which may further result in the auditor being dismissed;on the other hand,when the auditors found that the client's financial report exists material misstatement risk,they may choose to resign.Once the auditor switch,the successor auditor's conservatism and independence becomes very important issue.In this paper,we select continuous twice occurrence of auditor switch of Sinovel as the research object,analyze whether the successor auditor maintained higher conservatism.Firstly,by analyzing the basic financial ability of Sinovel and comparing with the industry,we had confidence in the existence of Sinovel whitewash performance motivation and signs;secondly,through the analysis of whitewash method,we found the major fraudulent means.It main through fictitious income and confirming revenues in advance for financial fraud;thirdly,the manipulation of accruals and income levels which successor auditors can tolerant are falling after auditor switch.It indicates that comparing with the predecessor auditor,successor auditor conservatism has been improved;lastly,through further analysis of the audit opinion and the audit fee,we found that the severity of audit opinion that successor auditor published has increased,and at the same time the audit fee has not decreased obviously.In addition,from the firm's risk management perspective,accounting firm configuration more experienced auditors for Sinovel.Finally,we put forward some beneficial suggestions from the macro and micro two aspects,in order to further standardizing the audit market,improving regulatory policies,enhancing audit independence and conservatism and improving audit quality.