Multiple Years Of Internal Control Weaknesses Disclosure And Audit Fees

In recent years,financial fraud has become increasingly exposed.The effectiveness of internal control has gradually entered the public's perspective and has become another important basis for people's investment decisions.At present,the impact of the disclosure of internal control weaknesses has begun to attract the attention of all parties in the society,and an upsurge of research in the field of internal control has also begun in the academic community.The disclosure of internal control weaknesses conveys to the market the existing risk of company,which naturally increases the audit risk.If an enterprise repeatedly discloses internal control weaknesses,it represents that the company doesn't pay attention to the internal control problems,and it also shows that the company doesn't have enough ability to correct the disclosed weaknesses.Whether it is a lack of ability or an appropriate attitude,it will further increase the audit risk faced by the CPA.However,during the audit process,did the CPA fully pay attention to the company's repeated disclosure of weaknesses,and then demanded higher risk compensation for the higher audit risks it implied? According to risk-oriented audit theory,the impact of audit fees includes risk premium and audit cost.The first is to avoid high-audit risks by increasing auditing investment and improving audit quality.The second is to choose to collude with management and collect higher risk opinions through audit opinion purchases to make up for potential losses from audit risks.So,in the face of the high audit risk perceived from the time of disclosures of internal control weaknesses,which path will CPAs choose to deal with risks and then affect audit fees? This study examines the impact of the time of disclosures of internal control weaknesses on audit fees and their paths,and further discusses the regulatory role played by accrued earnings management levels in the time of disclosures of internal control weaknesses and audit fees.It not only helps to understand the managers' attitude of internal control quality and their ability to improve internal control,but also helps to understand whether CPA fully considers the company's audit risk and responds.This study selected the listed companies of Shanghai A-shares from 2010 to 2016 as research samples.Based on the perspective of audit risk perception,it examined the impact of the time of internal control weaknesses disclosure on audit fees,and examined the The relationship between audit opinions reveals the internal mechanism of the impact of internal control weaknesses disclosure audit fees,and then further explores the differences in the time of internal control weaknesses disclosure in the audit fee behavior of CPAs under different levels of accrued earnings management.The results of the study show that the more disclosures of corporate internal control weaknesses,the greater the audit risk perceived by certified public accountants,and the higher audit fees as risk compensation.At the same time,in the face of high audit risks reflected in the time of internal control weakness disclosures,CPAs adopted a proactive response and issued more non-standard audit opinions to evade audit risks.The degree of enterprise's accrued earnings management plays a regulatory role in the relationship between the time of disclosures of internal control weaknesses and audit fees.Specifically,a relatively large degree of accrued earnings management allows CPAs to perceive greater audit risks,thereby weakening the impact of the time of internal control weakness disclosures on audit fees.When the level of accrued earnings management is low,CPAs perceive the audit risk from disclosed weaknesses,and the time of disclosures of internal control weaknesses was positively correlated with audit fees.