Audit Fees,non-audit Fees And Financial Reporting Quality

In recent years,cases of financial fraud emerge in endlessly,whether in the international or domestic market.In 2016,183 administrative punishments have been meted out by The China Securities Regulatory Commission(CSRC),and 218 written decision of administrative penalty have been issued.The number of punishments reached a new record.As of May 2017,more than 60 cases of financial fraud have been exposed.A spate of accounting scandals make public,people began to express profound concern about the quality of financial reports of listed companies,users of the information query the truthfulness of the financial data constantly.This will not help investors make investment decisions,and also hinder the sustainable development of capital markets..As a key component of financial reporting supply chain,the role of CPA in the capital market is obvious to all.By providing audit services,they can find the company's account loopholes and prevent the appearance of false information,thus ensure the company's true and accurate disclosure of the financial situation;Through the provision of non-audit services,they can use professional skills to provide diversified services for the enterprise to cope with the rapid development of global economy,and it's also a response to the practice of environmental degradation.Charging audit fees,CPAs play the role of the external supervision;Charging non-audit fees,CPA plays the role of internal management.But in the last few years,88 percent of companies that have been publicly penalized by supervision department for fraud financial reports have received standard audit reports from certified public accountants.As a result,there is no shortage of company in the capital market which has poor financial reporting but has a label that says it's qualified,and the label is provided by certified public accountants.Why can certified public accountants fail to manage and curb the production of low-quality financial reports better while maintaining their independence?A large part of the reason can be attributed to the economic benefits that exist between CPA and the audited client.Therefore,it is particularly important to dig up the deep reason why the CPA failed to effectively stop the low quality financial report,and the paper start with two aspects-the audit fees and the non-audit fees.Based on the data of China's A-share listed companies from 2011 to 2015,the paper empirically tests audit fees' influence on financial reporting quality,and adding non-audit services to explore when the accounting firm provide audit services to the customers at the same time provides non-audit services,whether it will affect the relationship between the auditing services and financial reporting quality.The paper is divided into six parts.In the first,the article describes background and the overall architecture,in the second part,carries on the literature review,then analyses theoretically the relationship between the quality of financial reporting and Auditor fee and put forward the article hypothesis.Through designing research model and selecting samples,being a steppingstone to empirical analysis.In the fifth part,we carry on the empirical test,and put forward relevant countermeasures according to the results of the inspection.The empirical results show that:(1)The firms pay more audit fee,the certified public accountants can diligently found the company's material misstatement and ask managers to correct it,reduce the possibility of administrative penalty for false disclosure,improve financial reporting quality from the perspective of external governance,namely,it has a significant positive correlation between total audit fees and financial reporting quality;(2)The existence of non-audit fees has inhibited the improvement of the quality of financial reporting by audit fees.In our country,providing non-audit services will not be restricted,as a "economic man",questing for profits make the public accounting firms have the risk of moral hazard,according to the knowledge which obtain from non-audit services,CPA may reduce the judgment of the work's complexity and may loaf on the job because of the commercial culture,which reduces the positive effect that audit cost carries on to the financial reporting.This paper expands related research in the field of the auditor fees,audit quality and financial reporting quality,provides a new cognition for certified public accountants to prevent the risk of low quality of financial reporting,and provides suggestions for regulating the charging behavior of accounting firm.