Research On The Impact Of Executive Corruption And Internal Control Quality On Audit Fees

With the development of capital market,certified public accountants and accounting firms come into being.Certified public accountants audit the financial reports of the audited units and issue audit reports.The financial reports of enterprises and the audit reports of certified public accountants are the information basis for decision-making of capital market participants.The CPA system has an important effect on the healthy development of capital market.As an organization responsible for its own profits and losses,accounting firms need to charge fees in order to carry out audit work and ensure continuous operation.Audit fee is not only the guarantee of audit work,but also the economic basis of audit quality.The economic business complexity,enterprise management level and manager’s conduct of the audited units will affect the level of audit risk and audit quality.In order to reduce audit risk and improve audit quality,accounting firms need to increase audit investment,so it is very important to collect reasonable audit fees.Listed companies are the main body of the economic market and audit clients of accounting firms.Their internal control quality and corporate governance effect are closely concerned by all sectors of society.However,in recent years,the internal control quality of some listed companies is low,and the corruption of senior managers(hereinafter referred to as "senior executives")occurs frequently,which not only damages the economic interests of all participants in the capital market,but also have an impact on the determination of audit fees and the assurance of audit quality.Good internal control can not only reduce the risk of financial statement misstatement and fraud,but also improve the efficiency of operation and affect the arrangement of audit work.To some extent,it will affect the audit procedures of certified public accountants and thus affect audit fees.The corruption of senior executives of listed companies will not only damage the interests of shareholders,but also expose the corporate governance problems and governance level,which will have an impact on audit risk and audit input and audit fees.In this paper,315 samples are selected from A-share listed companies in Shanghai and Shenzhen in 2013-2018 to study the impact of senior executives’ corruption and internalcontrol quality on audit fees.At the same time,by distinguishing the nature of sample property rights,further study the difference of this impact.The study found that whether corporate executives had corrupt behavior was significantly positively related to audit fees,that is,corruption of corporate executives will lead to high audit fees;further research shows that high quality of corporate internal control has a weakening effect on the relationship between corporate corruption and audit fees,that is,the higher quality of internal control is,the higher the corporate corruption is,the higher the audit fees are The less the impact of fees.According to the nature of property rights,listed companies are divided into state-owned holding enterprises(hereinafter referred to as "state-owned enterprises")and non-state-owned holding enterprises(hereinafter referred to as "non-state-owned enterprises").In the case of distinguishing the nature of sample property rights,this paper finds that compared with state-owned enterprises,non-state-owned enterprise executives’ corruption and audit fees have a more significant positive correlation.When considering the quality of internal control,the quality of internal control of non-state-owned enterprises has a more significant inhibitory effect on the positive relationship between corruption and audit fees,and the quality of internal control of non-state-owned enterprises has a more significant inhibitory effect on the positive relationship between them.Based on the conclusion of this paper,combined with the current economic and market situation,it is suggested that enterprises should further strengthen the construction of internal control and find out the potential corruption in time.Accounting firms should consider the potential audit risk and additional audit input when executives are corrupt,and reasonably determine audit fees to ensure the audit quality and healthy development of accounting firms.