Research On The Influence Of Internal Control Defects And Its Modification To Audit Fees

From American's "WorldCom","Enron" and a series of financial fraud to China "silver Guangxia","Lantian shares" and other financial fraud incidents,it shoes that Internal Control plays an important role for listed companies to prevent financial risks.In 2008,China's five ministries and commissions issued the "basic norms of internal control",then in 2010,five ministries and commissions issued the "corporate internal control supporting guidelines",thus China's internal control laws and regulations have achieved initial results.The audit pricing is the external manifestation of the inherent characteristics of the audit service.The reasonable standard of audit pricing is the need to take into account the relevant interests of all parties.It plays an important role in maintaining the stability of the audit market and improving the quality of the audit service.The firm's audit of the enterprise will inevitably consider the risk of corporate control,then on the basis of the study of internal control defects and rectification and audit fees related to the relationship between China can establish a good internal control system and standardize the audit market pricing has a certain reality significance.Based on the theory of risk-oriented audit,risk premium theory,principal-agent theory,cost-benefit theory and signal transmission theory,this paper combs the domestic and foreign literature and development trends in recent years through the literature research and empirical analysis.As an explanatory variable,the internal control deficiencies,the severity of internal control defects,the internal control defects rectification as the explanatory variables,and the introduction of the company size,asset-liability ratio,total assets net interest rate as a control variable,based on previous scholars The internal control defects are refined,divided into: general defects,important defects and major defects;the internal control defects rectification has also been refined,divided into: no rectification,part of the rectification,all rectification,the study of the internal control of listed companies The Impact of Defects and Its Rectification on Auditing Charges.The results show that: there is a significant positive correlation between internal control deficiencies and audit fees;the existence of internal control deficiencies in listed companies will increase the audit fees.As a result,listed companies can reduce their audit fees by improving their own internal controls.Second,the severity of internal control deficiencies and audit fees between the no significant significant correlation between.As long as the listed company has internal control deficiencies,regardless of the severity of the defect,the certified public accountants will no longer trust the internal control system of the audited entity,thus reducing the control test,increase the substantive procedures,the audit cost increases,the audit fee increases.Third,the internal control defects rectification,rectification makes the internal control operation is valid,the audit fee will be reduced.