The Research On The Impact Of The Earnings Quality Of Listed Companies On The Internal Control Audit Opinions

The continuous innovation of the financial system in the world today leads to the management of listed companies and the increasingly complex relationship between stakeholders.Accounting information fraud and audit failures of listed company happen constantly.All these have given the relevant regulatory authorities a wake-up call,so countries have accelerated the introduction of new policies to supervise listed companies.The U.S.government took the lead in establishing an internal control auditing system.Chinese relevant regulatory authorities also successively issued various guidelines and regulations.In 2014,they began to require listed companies on the Main Board to fully implement internal control audits.Due to the short implementation time of Chinese internal control auditing system and insufficient empirical data,few scholars focus on internal control auditing.However,as the time for implementation of relevant regulations becomes longer,the amount of data in this section gradually increases,and scholars' research on internal control audit will also increase.Chinese relevant laws and regulations require certified public accountants to audit the effectiveness of internal control over financial reporting and issue internal control audit opinions.The certified public accountant can directly evaluate internal control and issue internal control audit opinion through internal control,and can also indirectly evaluate internal control and issue internal control audit opinion through the effect of internal control.Earnings quality of listed companies has always been thefocus of public attention.Studies related to earnings quality have never stopped.There is already a large amount of literature indicating that a good level of internal control will increase the quality of listed companies' earnings.Therefore,the quality of earnings is the result of internal control.Therefore,through indirect evaluation methods,CPAs can assess the internal control of listed companies' earnings quality.This article explores the relationship between earnings quality and internal control audit opinions,and further discusses the impact of the shareholding ratio of the largest shareholder on the relationship between the two.After combing internal control audit,internal control and earnings quality,equity concentration and internal control related documents in China and abroad,this paper proposes two assumptions based on principal-agent theory and fraud triangle theory on the basis of previous research.Then,they measure the quality of listed companies' earnings with accrued earnings management levels and actual earnings management levels.At the same time,they control other variables that may affect the audit opinion of internal control.Then they select the data of listed companies on the Main Board from 2014 to 2016,and logit models are used for regression analysis.The impact of earnings quality on internal control audit opinion,further adding equity concentration adjustment variables to study the influence of the shareholding ratio of the largest shareholder on the relationship between the two;the final use of the DD model calculation of the degree of accrued earnings management as an alternative to the quality of earnings,Robustness testing by Logit model regression.This study concludes that the lower the earnings quality of a company,the more likely an independent third-party certified public accountant will issue a non-standard internal control audit opinion.The reason is that when the quality of corporate earnings is not good,there may be a problem with the internal control of listed companies.Therefore,an independent third-party certified public accountant is more inclined to issue non-standard internal control audit opinions when auditing internal controls.The higher the shareholding ratio of the largest shareholder,the less likely it will be for CPAs to issue non-standard internal control audit opinions due to lowquality of earnings.The possible reason is that the listed company's equity concentration is large.When the first largest shareholder has a high proportion of shares,he can effectively supervise the management's behavior and the company will establish an effective internal control system.Even if the quality of earnings is low,CPAs will weaken the possibility of issuing non-standard internal control audit opinions.On the other hand,the largest shareholder holding a high proportion of shares,they will affect the independence of the CPA,thus weakening the impact of the quality of the listed company's earnings on the internal control audit opinion.The contribution of this paper is mainly based on China's mandatory enforcement of internal control audit as a turning point,and discusses that the CPA judges the validity of internal control from the perspective of indirect evaluation of the effectiveness of internal control and issues internal control audit opinions.