A Case Study Of Auditor's Reputation,Regulatory Environment And Stability Of Auditing Contract

Nowadays regulators have strengthened the supervision of listed companies and accounting firms,then more companies and related firms have been punished.The frequency of exchanges has become higher and higher.This phenomenon has triggered the author's Thinking:does the regulatory environment have a certain degree of impact on the reputation of auditors?Does damage to reputation change the stability of audit engagements?What is the relationship between the three?This paper adopts the method of case analysis to analyze the relationship among the three,and selects the typical three-year audit failure cases about Reanda.It starts from the measurement of the auditor's reputation,regulatory environment,and the stability of audit engagement,then builds a theoretical bridge to demonstrate.First,it finds that the different CSRC's penalties have exerted different influence on the reputational capital and material capital of Reanda's reputation.Secondly,the audit engagement between the listed company with fraud and Reanda had broken,and the employment contract of other audit clients and Reanda has also been affected to varying degrees.The stability of the audit engagement of the penalized firm and the original client has deteriorated;The listed company with high quality audit needs tends to undergo upgrade changes.However,based on China's auditing market,audit requirements are not sensitive to audit quality,certain customers' choices of audit institutions have not been significantly affected by the CSRC's penalties.Besides,When relevant auditor moves,the auditor's personal reputation may not significantly affect the stability of the current firm's audit engagement due to the failure of the original firm's audit,nor does it affect the individual's current practice in the current firm.The impact of the penalties imposed by the regulatory agency on the firm itself exceeds that of the auditor.The conclusion of this paper shows that the more perfect and effective the supervision,the more standardized the audit market,and the higher the reputation,the more stable the employment contract will be.Therefore,it is of great significance to play the role of regulatory agency to form good regulatory environment,promote the formation of good auditor's reputation and maintain the stability of audit engagement.