Auditor's Individual Experience,Client Importance And Audit Quality

Auditing is an experiential profession.As the executor of specific audit business,auditor's individual experience directly affects audit behavior and audit quality.With the increase of audit experience,auditors accumulate more experience and have a better understanding of the whole process of audit,which helps auditors accurately identify potential risk points of the audited entity,restrain the earnings manipulation behavior of the company management,and ensure the quality of audit.In recent years,auditors have been exposed to increased regulatory and litigation risks,and the probability of audit failure of important clients has increased,client importance may enhance the impact of auditor's individual experience on audit quality through auditor's reputation loss cost and risk awareness.Firstly,this paper defines the concepts of auditor's individual experience,client importance and audit quality and based on learning effect theory,reputation theory and deep pocket theory,this paper analyses the influence mechanism of auditor's individual experience on audit quality,and whether client importance will affect the impact of auditor's individual experience on audit quality,and puts forward two hypotheses.Secondly,this paper chooses Ashare listed companies in Shanghai and Shenzhen from 2012 to 2017 as the research object to make the empirical analysis to test two hypotheses.We get the results as flows:there is a significant positive correlation between auditor's individual experience and audit quality.When economic importance of the client is high,the auditor's individual experience is significantly and positively correlated with the audit quality,but when economic importance of the client is low,the auditor's individual experience is not correlated with the audit quality.That is to say,the richer the auditor's individual experience is,the higher the quality of audit.The higher economic importance of the client,the higher the cost of audit failure.In order to avoid the adverse economic consequences caused by audit failure,experienced auditors have stronger risk awareness and higher audit quality.In addition,in order to make research conclusions more robust,this paper conducts robustness tests from audit quality,individual experience,client importance and endogenous test.Finally,according to the research conclusions,this paper gives related suggestions from the perspective of auditors,firms and regulatory institutions.