Font Size: a A A

The Impact Of Government Regulation On The Change Of Audit Client

Posted on:2020-05-02Degree:MasterType:Thesis
Country:ChinaCandidate:X Y ZhaoFull Text:PDF
Abstract/Summary:PDF Full Text Request
In the capital market where information asymmetry contradictions are increasingly prominent,corporate stakeholders cannot independently judge the truthfulness and fairness of financial statements,so as to understand the true financial situation of the company.In order to resolve the above contradictions,the CPA profession have become crucial.Although the China Securities Regulatory Commission(CSRC)has paid more attention to the government regulation mechanism in recent years to suppress the information manipulation of listed companies,to force accounting firms to audit carefully and improve the quality of auditing,but the financial fraud cases and audit failures have not disappeared.In order to better understand the impact of government supervisor CSRC's penalties on the accounting firm's economic,especially on auditing client changes,this paper selects a large accounting firm who has amounts of audit client but frequently change and successively being punished by CSRC in 2016 and 2017 as case.The analysis of audit clients change after government regulation will be carried on from change types and change reasons.Then discusses the economic effectiveness of the government regulation on the accounting firm,and explores the mechanism behind it to put forward more targeted recommendations about regulation behavior of CSRC and client risk management of accounting firm.This paper selects Ruihua Certified Public Accountants as the main case,and firstly builds the logical framework of government regulation's influences on audit clients change.Then from the perspective of change types and change reasons to analyze audit clients change through data comparison,and from audit fee and audit opinions types to discuss Ruihua's subsequent response.In addition,this paper verifies the mechanism behind the impact of government regulation on audit clients changes from market position,audit independence,reputation change,audit fees,risk control and audit quality.Through the case study of Ruihua,this paper made conclusion that the impact of continuous sanction of CSRC on the number of direct audit client's loss is greater than the first,and the severe punishment,such as temporarily disqualifying the securities has significant negative impact through the reputation mechanism on the ability of accounting firm's ability of maintain audit clients,compared with the measures of warning and criticism.At the same time,it also makes effective on the risk management and audit quality improvement of accounting firm.In addition,it is found that Ruihua's new clients mainly rely on IPO derivatives,and audit clients occupy a dominant position in the change of contractual relationship.However,government regulation strengthens the pressure and courage of accounting firm to resign audit clients to a certain extent.Therefore,the following suggestions are proposed.Firstly,in the perspective of government regulation,it is necessary to strengthen the continuous regulation and inspection of the rectification of accounting firm after the penalty,and the different roles of the supervisors should be fully utilized to improve the efficiency.Secondly,in the audit client's risk management of accounting firms,it is important to carefully select clients and prevent client abnormal loss,and have a comprehensive inspection when development new audit clients.Thirdly,it is significant to perfect the brand reputation of accounting firm,and strengthen the professional ethics of firm and CPA so that the quality of audits could be improvement.
Keywords/Search Tags:Government regulation, Audit client changes, Accounting firm behavior, Audit client selection
PDF Full Text Request
Related items