Research On The Relationship Between Capitalized R&D Expenses And Audit Fee

At the Summer Davos Forum in September 2014,Prime Minister Li Keqiang responded to the public by launching “popular entrepreneurship and innovation” to encourage entrepreneurship and innovation for all.The 19 th National Congress of the Communist Party of China,which has just passed,it also emphasized that if a company,a country,or a nation wants to be undefeated in all fields,innovation is very important.Therefore,both the country and the company must put the importance of innovation in the company on the agenda.In an enterprise,it is indispensable to research and develop this vital activity in order to innovate.If a company attaches great importance to the importance of research and development,plus any project,capital is the basic guarantee.There are three methods for how to measure the research and development of this project.There are three ways to deal with the treatment of other projects: accounting for expenses,processing intangible assets,and capitalizing on conditions.In China,all costs are required to be accounted for before 2006.In 2006,China introduced new accounting standards,allowing companies to capitalize expenditures that meet conditions in the development phase.The introduction of this standard is actually more suitable for accounting.Income and expense matching principle.The research and development expenditure that can be capitalized enhances the information relevance conveyed by accounting records,but because the specific application of this criterion is related to the subjective opinions and professional judgement abilities of management,this may be the use of R&D by the company's management.The capitalization of costs will provide space for earnings manipulation,and the quality of accounting information may be compromised.This poses great difficulties and challenges for the CPA audit.After studying the previous professional research on the topic of audit fees,it was concluded that there are two main sources of audit fees: audit costs and audit risks.For listed companies with R&D activities,audit costs are indirectly increased,both in terms of audit costs and audit risks.By using a combination of literature research and empirical research,this paper discusses the relationship between R&D expenses and audit fees for the capitalization of A-share listed companies.The article first elaborates relevant research hypotheses,and conducts empirical analysis to make further assumptions for the thesis.prove.The paper takes the research object of all A-share listed companies from 2007 to 2015,and assumes that Sumnic(1980)'s audit valuation model is used as a reference to conduct empirical tests.Secondly,because the size of the company affects both audit revenue and R&D investment,there are differences in the metrics of different industries.Therefore,assuming that only the listed companies in the manufacturing industry are used as an example,capitalization of R&D investment will be explored in companies with different scales.Is there any correlation with audit fees? Empirical research shows that for A-share listed companies,there is a significant positive correlation between capitalized R&D expenses and audit fees.The more capitalized R&D expenses,the higher the audit fees.Further,for the listed companies in the manufacturing industry,the size of the company will have an impact on the relationship between the two: the larger the size of the company,the more obvious the positive correlation between capitalized R&D expenses and audit fees.Proven.In the model's control variables,relevant variables such as asset-liability ratio,asset yield,quick ratio,and audit opinions were added,and the relationship between them and audit fees was also proved.Finally,according to the conclusions summarized in the thesis,some introductory suggestions are made on the current status of capitalization of R&D expenditures in China and the influencing factors of audit fees,in the hope of providing relevant theoretical references to the academic community.