Empirical Study On Customer Importance And Audit Quality Of Branch Office

In the field of audit,audit quality is an enduring hot topic.Regarding the question of the relationship between the auditor's customer importance(Economic dependence)and the quality of its audit practice,the long-term discussion in the academic community has not yet reached a consensus conclusion.In recent years,with the help of the government's policy to make accounting firms bigger and stronger,the branches of accounting firms have mushroomed and become the backbone of China's audit market.At present,most of the research on audit quality is based on the overall level of the firm.However,the quality of audit reports exported by the internal practice units of the accounting firm is not homogeneous.Therefore,in the research unit on audit quality,the branch office is more practical than the overall firm.Besides,in the audit practice process,most of the Signature certified public accountants(CPAs)are respons ible for specific communication,consultation and negotiation with the audited clients,also they are the final adjudicators of audit decisions other than accounting firms.As the result,it is of great importance to discuss the influence of the professional characteristics of Signature CPA's client importance on the audit quality of the branch office from the perspective of Signature CPA.In recent years,the branch offices of accounting firms in China have expanded rapidly,and new changes have taken place in the client resources and client structure of branch offices and Signature CPAs.Then,in this context,what will be the impact of the client importance both at branch office level and Signature CPA' level,as well as their interaction on the audit quality of the branch office?Taking these three questions as the basic orientation,this paper builds an analytical framework based on rent-seeking theory,reputation theory,economic subject hypothesis and system theory,and deducts the following research hypothesis.Then it selects Shanghai and Shenzhen A-share listed companies audited by firm's branches during 2014 and 2017 as the research sample.The absolute value of the maneuverability accrual estimated by the Jones model is used as a measure of the aud it quality of the branch.This paper empirically proves the influence of client importance at both branch level and signing CPA level,as well as their interactions on the audit quality of the branch office.The research shows that:(1)The higher the importance of the customer at the branch level,the greater the absolute value of the manageability accrual,and the worse the audit quality of the branch;(2)The higher the importance of the customer at the level of signing CPA,the greater the absolute value o f the manageability accrual,and the worse the audit quality of the branch;(3)In the process of influencing the audit quality of the branch office,the client importance of the branch office and of the signing CPA have substitution effects.In order to red uce or even eliminate the adverse impact of client importance on the audit quality of the branch,and promote healthy and orderly development of China's CPA industry,this paper proposes the following policy recommendations:(1)Establish and maintain an independent audit reputation mechanism and give full play to the role of the independent audit reputation mechanism;(2)Strengthen the supervision of the practice of the firm's branch office as well as signing CPAs;(3)Enrich and optimize the client resources and structure of the branch office and signing CPAs.