Research On The Relationship Between Deferred Income Tax And Audit Fee

In 2006,the “Accounting Standards for Business Enterprises No.18 – Income Tax” promulgated by the Ministry of Finance incorporated the concept of assets and liabilities into China's income tax accounting.This is not only the convergence with international accounting standards,but also an inevitable trend in the development of income tax accounting.However,in practice,the difference between accounting standards and corporate income tax law has become a fertile ground for nourishing managers to use private information for earnings management and tax avoidance,which seriously affects the accounting information reflected by the deferred income tax assets and deferred income tax liabilities.In order to alleviate information asymmetry and ensure the healthy and efficient operation of the capital market,the CPA executive program checks whether the accounting information in the financial report published by the listed company is relevant and reliable,and negotiates the audit fee with the customer to make up for the resources and risk in the implementation work.In 2010,the Ministry of Finance and the State Administration of Market Supervision formulated the "Interim Provisions on Promoting the Transformation of Limited Liability Accounting Firms into Partnership Accounting Firms".The introduction of this regulation means that the CPA's responsibilities are aggravated,so the practice will also more cautious.Taking cost and risk as the connection points,it can be seen that the problems of earnings management and tax avoidance in the information of deferred income tax assets and deferred income tax liabilities are professional,universal and concealed,which increases the difficulty of auditing and the risk of expected loss,and it will lead to an increase in audit fees.This paper analyzes in detail the process of generating income tax assets and deferred income tax liabilities for earnings management and tax avoidance,and then affecting audit fees.At the same time,based on the deferred income tax and audit fee data of state-owned enterprises and private enterprises in Shanghai and Shenzhen A-share listed companies from 2013 to 2017,the empirical test found that there is a significant positive correlation between the current deferred income tax assets and deferred income tax liabilities and the audit fees,that is,the greater the change in the current deferred income tax assets and deferred income tax liabilities,the higher the audit fees.Taking into account the special circumstances of China,this paper further studies the relationship between the change of deferred income tax and audit fees under different property rights.The results show that compared with state-owned enterprises,the relationship between deferred income tax assets and audit fees is more significant in private enterprises,but the deferred income tax liabilities are not significantly different.In order to further explore the role of property rights in the relationship between deferred income tax liabilities and audit fees,this paper divides state-owned enterprises into central state-owned enterprises and local state-owned enterprises.The results show that compared with central state-owned enterprises,the relationship between deferred income tax assets and audit fees in local state-owned enterprises is more significant.Based on the relationship between deferred income tax and audit fees,this paper studies the changes of this relationship under different property rights.In theory,firstly,the result deepen the understanding of the theory of audit insurance demand.Secondly,the research on deferred income tax has been extended from internal to third party.Thirdly,the accounting standards have been improved..In practice,management is required to try its best to improve the company's development.Earnings management and tax avoidance manipulation will increase the external cost of the enterprise.For CPAs,it is necessary to maintain a sensitive risk sense and pay attention to deferred income tax assets and deferred income tax liabilities;for regulators,it is necessary to emphasize the disclosure of information,especially private enterprises and local state-owned enterprises,and deepen the understanding of audit services.