The Impact On Audit Quality Of Public Accounting Firm Merger

Following the Third Plenary Session of the Eleventh Central Committee,China has carried out the policy of reform and opening up in an all-round way,which has injected a strong impetus into the economic development of our country,and has made great strides in the past 30 years since the reform and opening up,creating an economic miracle belonging to China.After the opening of the domestic audit service market,the local accounting firms in China are not only facing the competitive pressure brought by the large international accounting firms,but also facing the severe form of industrial restructuring.At that time,China's local accounting firms had just started,and there was a huge gap between the size and the "Big Four" and the talent allocation was uneven.After opening up the audit service market,we are facing fierce competition with the "Big Four" to provide high-quality audit services,which also brings severe challenges to the development of local accounting firms in China.Since 1998,China's accounting firms have experienced three large-scale mergers under the leadership of the government.The first wave of consolidation of accounting firms in 1998-1999 was caused by the "decoupling and restructuring" of accounting firms.From 2000 to 2001,accounting firms began the second large-scale merger,the main reason is that they hope to retain their securities access qualifications.The third wave of consolidation from 2006 to now is the support and guidance of the regulator for the audit service market.From another point of view,the demand of many enterprises for high-end audit services also promotes the development of audit services.Up to now,China's local accounting firms have gradually grown up under the screening of the audit market,both the size of the firms and the level of practice have been greatly improved.Therefore,the competition of audit service market is becoming more and more fierce,which brings heavy pressure to the survival and development of local small institutes at this stage,forcing them to embark on the road of expansion and development.For accounting firms,merger is an important channel for their rapid development,so local small firms are seeking suitable opportunities for merger.In this context,taking the merger of Jonten Certified Public Accountants as an example,this paper collects the data of public financial statements of some listed companies audited by Jonten Certified Public Accountants and Shandong Tianhengxin Certified Public Accountants,and evaluates the audit services of Jonten Certified Public Accountants from the perspectives of the degree of customer earnings management and the proportion of financial restatement.Quality impact.The author mainly divides it into five parts to discuss:The first part is the introduction,which mainly makes a brief analysis of the background and significance of the paper,and then summarizes the research of scholars at home and abroad.The second part mainly analyses and summarizes the relevant scholars' research theory,and elaborates on the merger of firms and audit services.Its content mainly includes the definition and measurement of audit quality,the concept and method of consolidation of firms.In this part,the related theories about the impact of Firm Merger on audit quality are also introduced,including reputation theory,synergy effect theory,scale economy theory and market power theory.The third part of this paper first introduces the relevant situation of Jonten Certified Public Accountants and Shandong Tianhengxin Certified Public Accountants.Then it introduces the motivation of the merger,including expanding the size of firms and creating synergies.Finally,the characteristics of merger are summarized.The fourth part focuses on the earnings management and financial management of enterprises,and discusses the changes of audit services of Jonten Certified Public Accountants after the merger.The path of improving audit quality is analyzed from three aspects: reputation level,economic dependence on customers and customer structure.Finally,based on the results of theoretical and case studies,this paper draws the following conclusions: through the analysis of the level of customer earnings management and financial restatement,it is concluded that the consolidation of accounting firms can improve the audit quality to a certain extent;whether the consolidation of their own resources is effective after the consolidation is still an important factor affecting the audit quality after the consolidation;Regulators should continue to promote the consolidation of Chinese firms in order to enhance the competitiveness of their audit services.In this case,Jonten Certified Public Accountants and Shandong Tianhengxin Certified Public Accountants are both typical local institutes.They are not as large as local institutes.They can represent the development status of local small institutes in China and have certain practical significance.In addition,the comprehensive ranking of Jonten Certified Public Accountants is much higher than that of Shandong Tianhengxin Certified Public Accountants.The combination of Jonten Certified Public Accountants and Shandong Tianhengxin Certified Public Accountants is a typical "big eat small".Compared with the "strong-strong alliance" of comparable scale,the scale gap between the two sides of the merger in this case is large,and there are huge gaps in the culture,management methods and professional level of the office,so it can better reflect the impact of the merger on the audit quality of both sides,and also provide some reference for the regulators to continue to promote the development of the audit service market in China.