Research On The Impact Of Signature CPA' Re-Appointment On Audit Quality

Whether the mandatory rotation rules can prevent the adverse impact of audit tenure and signed CPA-customer relationship on audit independence has been the focus of academic circles.In 2003,China also issued the Regulations on Periodic Rotation of Signed Certified Public Accountants in Securities and Futures Auditing Business,which stipulates that the auditing services provided by the signing certified public accountants to the same institution shall not exceed five years in a row,and that the auditing services shall not be provided to the same institution again within at least two years after five consecutive years.The promulgation of the regulations reflects that relevant departments begin to attach importance to the relationship between signed CPAs and auditees,which may have adverse effects on audit quality.This paper defines the auditing service provided by the signature CPA to the same listed company after five years of continuous auditing and two years of "cooling-off period" as "re-appointment of the signature CPA",and examines its impact on audit quality.On the basis of previous research,this paper uses audit independence theory,asset specificity theory,reputation theory and deep pocket theory,and combines the institutional background of our country.Taking the listed companies on A-share motherboard of Shanghai and Shenzhen Stock Exchanges from 2009 to 2017 as samples,this paper replaces the audit quality with the absolute value of controllable accrued profits,and empirically tests the relationship between the signed CPA and the auditee to audit.The impact of quality will be further divided into enterprises with different property rights,and the differences of the impact of re-appointment of Certified Public Accountants on audit quality will be studied.The empirical results show that:(1)Compared with the listed companies without the re-appointment of the signature CPA,the earnings management level of the listed companies with the re-appointment of the signature CPA is lower,which indicates that the re-appointment of the signature CPA can improve the audit quality;(2)Compared with the non-state-owned enterprises,the re-appointment of the signature CPA can improve the audit quality.The re-appointment of Certified Public Accountants in enterprises has a greater impact on audit quality.The innovation of this paper is to test the impact of CPA-customer relationship on audit quality from a brand-new perspective.Considering the different objectives of enterprises with different property rights and different degrees of external supervision,the listed companies are divided into state-owned enterprises and non-state-owned enterprises,and the re-appointment of CPA to audit in enterprises with different nature is studied.Differential influence of quality.Accordingly,this paper puts forward countermeasures and suggestions from three aspects: firstly,strengthening the construction of audit reputation mechanism and giving policy support to actively building brand reputation;secondly,under the background of compulsory rotation,encouraging signatory CPAs to accumulate professional expertise so as to avoid the success of audit profession while enhancing audit independence.Third,we should further refine the mandatory rotation rules for enterprises of different nature,extend the rotation period of state-owned enterprises,improve audit efficiency,ensure the audit quality of financial reports of Listed Companies in general,promote the sound development of audit market and safeguard the interests of stakeholders.