The Impact Of The Auditor's Re-appointment On Audit Quality And Audit Costs After Mandatory Rotation

Since the birth of CPA independent audit system,academic circles have been devoted to exploring and researching how to improve audit quality.Since the 21st century,the securities market at home and abroad has been a series of financial fraud cases of listed companies.As one of the big five accounting firm essence of the enron collapse,and domestic and the ensuing abandonment of audit failure event,this a series of cases of certified public accountants industry reputation was unprecedented impact and audit quality has been widespread public doubt that triggered the certified public accountants industry serious trust crisis.Theoretical analysis holds that audit tenure is an important factor affecting audit quality.In order to prevent long term led to the decrease of the independence that CPA auditing collusion with the audited units and the regulatory authorities in many countries to sign accountants forced rotation system is studied and put into practice,middle of the United States in 2002 issued the "sarbanes-oxley act,specifically request the company appointed for audit project partners period shall not exceed 5 years;In 2004,China also began to implement the regular rotation system of signed certified public accountants,which required the signing of certified public accountants to provide audit services for a relevant institution for no more than five years.To date,the regulation has been implemented for more than a decade,from the perspective of the research of relevant scholars,however,has not been forced rotation system improve the audit quality of the evidence,the policy effect is not obvious at present.And this notice at present,there is a bypass system behavior:some of the certified public accountant in the audit after the year of his term,arrange other signature transition certified public accountants to audit,and in two years or so after the interval of audit the customer again.This kind of behavior may lead to the decrease of audit quality and reduce the effect of the mandatory rotation system.This paper adopts normative research combined with empirical analysis method,in Shanghai and shenzhen two city in 2009-2016 a-share listed companies as the research object,studies the signature after forced rotation of certified public accountants resigned phenomenon and the relationship between the audit quality,audit fees,and further examines the transition from the auditor's audit quality.The research findings of this paper find that:(1)the accrued earnings management of the company audited by a certified public accountant who has been re-appointed after the compulsory rotation is larger than that of other certified public accountants.(2)the accrued earnings management of the company audited by the transitional auditor is greater than that of other certified public accountants.The cost of auditing firms audited by certified public accountants who have been re-appointed after a forced rotation has increased more than those of other certified public accountants.It reveals the negative impact on auditor independence and audit quality caused by the re-appointment of auditor after mandatory rotation,and reminds the users of financial statements to pay attention to this bad signal.In view of these conclusions,this paper puts forward relevant policy Suggestions,including the strengthening of the inspection disclosure and punishment of the enforcement of the mandatory rotation system of our auditors;To further improve the policy and safeguard auditor independence;We will improve the governance structure of listed companies and build a new auditing delegation model.