Research On The Impact Of Annual Report Interviews On Auditor's Decision-making

With the development of the audit market,the market supervision means are constantly updated,and the supervision measures in advance,during and after the event keep pace with the times.In 2011,the China Institute of Certified Public Accountants issued the "Regulations on Auditing and Supervision of Annual Reports of Listed Companies," which clearly proposed the implementation of the annual report auditing and supervision interview mechanism.The annual report interview belongs to the in-process supervision mechanism.It refers to the interview of accounting firms by the Chinese Institute of Certified Public Accountants against the audit risks of listed companies' annual reports.Its purpose is to strengthen the awareness of the audit risks of annual reports,prevent the practice risks and improve the quality of annual reviews.The implementation of this mechanism has so far attracted the attention of stakeholders inside and outside the industry.Based on this,this paper studies the supervision function of the annual report audit supervision interview mechanism from the perspective of auditor decision-making and whether there is any difference between the interviewed firms and the firms not interviewed,so as to prove the magnitude of the direct supervision function and the indirect supervision function.Based on Hawthorne Effect,Perceived Stereotype Theory and Group Infection Effect,this paper empirically tests the changes of auditor decisions before and after the interview event by using the data of A-share listed companies in Shanghai and Shenzhen Main Boards from 2011 to 2017.Specifically,the data of listed companies audited by the interviewed firms are used to test the impact of the annual report audit supervision interview mechanism and interview methods on auditor decision-making,i.e.to test the direct supervision function of the annual report audit supervision interview mechanism.Using the data of listed companies that have not been audited by the audit firms,this paper tests the impact of annual report interview information disclosure on auditors' decision-making,i.e.the indirect regulatory effect of the annual report audit supervision interview mechanism.The results show:(1)From the perspective of auditor decision-making,the direct supervision function of the annual report audit supervision interview mechanism is obvious,while the indirect supervision function is not obvious.In the listed companies audited by the interviewed firms,the auditors' process decisions(choosing audit fees as substitution variables)and outcome decisions(adopting audit opinion decisions as substitution variables)have significantly improved.In the listed companies that have not been audited by the interview firms,the decision-making of the auditor process has not improved significantly.As a result,the decision-making is more inclined to issue unqualified audit opinions and there is no significant improvement.(2)According to different interview methods,the direct supervision effect of annual report interview has significant difference in the result decision,but there is no significant difference in the process decision.In other words,among the three interviews,face-to-face interview,written interview and telephone interview,the audit opinion decision under the face-to-face interview method is more rigorous,but there is no obvious difference in the impact on the auditor's charging decision.(3)For the same interview risks,the indirect supervision effect is not obvious.That is,the auditor of the firm that has not been interviewed has not noticed the interview information or has not taken the risks of the annual interview seriously.Therefore,this paper suggests that the AICPA should improve the supervision system and enhance the influence of annual report interviews.It is suggested that accounting firms should attach importance to the quality control of practice and reasonably allocate personnel.It is suggested that auditors should enhance risk awareness and pay attention to risk information inside and outside the industry.Using Hawthorne Effect,Perceived Stereotype and Group Infection Effect,this paper focuses on the direct and indirect regulatory functions of the annual report audit supervision interview mechanism from the perspective of auditor decision-making.