Internal Control Quality,Analyst Following And Non-standard Audit Opinion Types

With the gradual development and improvement of China's capital market,the importance of securities analysts as "information intermediaries" between securities companies and investors is self-evident.The core work of securities analysts is mainly to analyze the macro and industrial environment of the company,the financial and operational situation of the company,and make specific judgments about the company's investment based on the two previous analyses.The role of securities analysts is mainly reflected in two aspects.Firstly,investors understand the relevant situation of listed companies according to the reports disclosed by analysts;secondly,securities companies can better find out the problems of their own units through analyst following,so as to play a regulatory role for enterprises,thereby improving the quality of internal control of enterprises.In order to better improve the quality of internal control and promote the smooth implementation of enterprise internal control normative system,the Ministry of Finance,the Securities Regulatory Commission,the Audit Office,the Banking Regulatory Commission and the Insurance Regulatory Commission jointly issued the Guidelines for Enterprise Internal Control Matching(Accounting No.11,2010)on April 26,2010.This guideline is known as the "Sarbanes Act" of China.Since its formal implementation,there has been an important premise for enterprises to implement the internal control norm system,that is,to self-evaluate the internal control quality of their own enterprises,to engage accounting firms to audit the internal control quality self-evaluation reports,and then to obtain the audit reports issued by accounting firms.On June 29,2017,the Ministry of Finance issued "Standards for Internal Control of Small Enterprises(Trial Implementation)"(Accounting No.21),which further standardized the construction of internal control of small enterprises.Will securities analysts influence the relationship between the quality of internal control and the type of audit opinions? If it has an impact,what kind of impact will it be?Do different types and backgrounds of securities analysts have different impacts on the relationship between internal control quality and audit opinion types?Based on the previous literature and principal-agent theory,information asymmetry theory and signaling theory,this paper uses the data of securities companies disclosed by Lushen Stock Exchange from 2013 to 2017 as samples to empirically analyze the relationship between internal control quality and non-standard audit opinions,as well as the impact of analyst tracking attributes on the relationship between the quality of internal control and the type of non-standard audit opinions.The results show that:(1)the quality of internal control is negatively correlated with non-standard audit opinions,i.e.the higher the quality of internal control,the less likely the CPA will issue non-standard audit opinions;(2)In the case of controlling other variables,the negative correlation between internal control quality and non-standard audit opinions is more evident in companies with analyst following than in companies without analyst following;the negative correlation between internal control quality and non-standard audit opinions is more evident in companies with more analysts than in companies with fewer analysts;(3)There are obvious differences among different types of analysts.Compared with non-star analysts,star analysts' research reports are more accurate,more trusted by information users,and have more obvious effects on the relationship between internal control quality and non-standard audit opinions.According to the research conclusion of this paper,several development countermeasures are put forward from three aspects of regulators,investors and CPA firms:(1)regulators should strengthen the supervision and management of auditors' competence and auditors' professional ethics to ensure the effective implementation of laws and regulations;(2)Regulators should strengthen the regulation of information disclosure of listed companies and broaden the channels for investors to obtain information;(3)Regulators should strengthen the education of investors,organize multi-topic lectures and capacity-building activities to enhance investors' awareness of audit opinions and other relevant information disclosed by enterprises;(4)CPA firms should strengthen management and service quality instead of blindly expanding their scale,and CPA firms should seize opportunities to improve their professional and technical abilities and professional judgment.