Research On The Impact Of Firm Political Correlation On Audit Fees

In recent years,the number of professionals in the CPA industry participating in political consultative meetings,people's congresses and party congresses has been increasing.The titles of members of the CPPCC,deputies to the NPC and party representatives have given them political status,they rely on in certified public accountants industry experience and professional ability,offer advice to the development of national economy,promoted the progress of the society and the development of the country,also let more people know about the certified public accountants industry,promote the healthy development of CPA industry.Industry representatives with political connections are members of an accounting firm in addition to their political identities.To some extent,they are also image representatives of an accounting firm,which will exert influence on the accounting firm.However,there are few literatures about the political relationship of CPA industry,and no scholars have studied the impact of auditor political relationship on audit fees.Therefore,this paper studies whether the audit fees of the auditors who are deputies to the provincial and national congresses,CPPCC members and party representatives from 2013 to 2017 are affected by the political connection when they conduct year-end audit business for listed companies.It further enriches the theoretical research on the political relevance and audit fees of the firm,and provides a reference for standardizing the political relevance management of the firm.This paper argues that the auditor was selected as the people's congress,CPPCC member and after the party,there will be a political identity,although this political identity can bring direct economic benefits to the firm,but can improve the auditor's reputation,increase social trust professional competence and professional ethics of auditors,because most of the firm is a partnership form at the same time,personal reputation would translate into overall reputation,therefore,the auditor's personal reputation to drive the improvement of the whole of the firm's reputation,enhance the firm's bargaining power.However,the factors that affect the reputation of auditors and firms are not only politically connections,so when the study is conducted,the impact of the audit reputation brought by the size of the firm represented by the Big Four on the audit fees.And the impact of the negative reputation brought about by the regulatory penalties on the audit fees as a control variable to exclude the impact of other factors on the reputation of the firm.Based on the data of Guotai'an and CPA Association of China,this paper makes an empirical analysis of auditor's political connections and audit fees.The results show that there is a significant positive correlation between the political connections established by auditors being elected as NPC deputies,CPPCC members and party representatives and the audit fees charged by the firms for their annual audit operations.