On The Low Price Competition Of Audit Charge

With the sustained and rapid development of China's economy,enterprises are accelerating the implementation of the "going out" strategy,actively participating in international cooperation and competition,allocating resources and expanding markets worldwide,and the characteristics of China's economic internationalization are becoming increasingly prominent.Building an open economic system with internal and external linkages,mutual benefit and win-win,safety and efficiency is inseparable from international comparable financial information and international accounting services,which puts forward new requirements for the internationalization of the CPA industry.At the end of 2004,CIFIC convened the Fourth Congress of its members,which put forward the idea of opening up the domestic market and entering the international market simultaneously,and called for measures to vigorously promote the internationalization of the industry.Local firms have carried out large-scale absorption and merger,the audit industry has entered the process of industrialization and branding,and the audit competition is also showing a trend of intensification.And after the price control of audit service fees was liberalized,the pricing power of accounting firms expanded,resulting in the audit pricing too low,especially the unreasonable pricing phenomenon of annual report audit fees of listed companies occurred frequently.The market often leads to unfair competition between accounting firms by lowering service prices,which directly affects the use of audit report data by investors.Therefore,how to regulate accounting firms,reasonable fees,curb low-price vicious competition,and promote the healthy development of the CPA industry is the direction of the author's research.The research methods adopted in this paper are literature research and case analysis.The main research idea is to introduce the background and significance of vicious low-price competition of audit fees,and then to adopt literature research method.Through consulting the relevant literature,this paper systematically reviews the research results of previous scholars and summarizes the relevant theoretical basis of low-price competition of audit fees,clarifies the competition situation of audit market,and determines and manifests the low-price competition of audit fees.Then,using case analysis method,taking Lixin Accounting Firm's low-cost fee audit failure as a case,the specific situation of the case and the various reasons leading to the low-cost competition of accounting firms are analyzed.Finally,the paper synthesizes the current situation ofaudit market at home and abroad and the views of experts and scholars to put forward some suggestions on how to curb the vicious low-price competition in audit market.The paper is divided into six parts:Part ?: Introduction.Firstly,this paper systematically expounds the background and significance of this study,and comprehensively and fully combs the relevant literature on low audit fees and competition in auditing market of accounting firms and comments on it.This paper introduces the research ideas and methods of the article,and describes the basic framework of the article.The second part is the overview of the theory of low-price competition of audit fees.It includes the definition of audit fees,the definition standard and manifestation of low audit fees,the influencing factors of audit fees and the theoretical basis of this paper.The author thinks that the definition standard of audit fee is "cost price" benchmark,that is,if the fee of accounting firms cannot meet the needs of manpower,office and necessary expenditure on the premise of ensuring the quality of practice,it can be judged as unfair low-price competition.There are three main factors affecting audit fees:(1)the size of the audited company,(2)the corporate governance structure of the audited company,and(3)the prediction of possible losses caused by audit risks.The theoretical basis lays the foundation for price theory,supply and demand theory,market theory and the theory of independence of substance and form.The third part: Introduce the case in this paper.Firstly,it introduces the manifestation of the low-cost fee of LiXin Accounting Firm and the brief introduction of DaZhiHui Company,which is the main body of the case,in order to describe and analyze the specific case.To reveal the consequences of audit quality caused by low-price competition of firms and the investigation and punishment of auditees,certified public accountants and accounting firms by the Securities Regulatory Commission.The fourth part: Reason analysis part,the article launches separately from three angles: the reason of accounting firm,the reason of big wisdom company and the objective reason of audit market.There are four main reasons for accounting firms.1.There is an initial discount for low-price packages 2.Firms hope to use low-price competition in order to gain market share expansion.3.The income structure of accounting firms is not perfect.4.The cost of litigation risk is lower than that of low-price competition.On the corporate side,the author starts from the perspective of irrational corporate governance structure,agency cost and neglect of audit quality.Itreveals the low concentration of audit market and low entry threshold.It is difficult to guarantee the quality of supply and the lack of effective demand at the demand side.Part five: Countermeasure and thinking.On the basis of the above analysis,the conclusion and Enlightenment of this study are drawn,and from the insinuation of this case,the author tries to find out the specific suggestions to curb the vicious low-price competition of audit fees from the perspective of three reasons in the fourth part.