Research On The Impact Of The Legal Liability Of Accounting Firm Partners On Audit Quality

Since the CPA industry was restored and rebuilt in 1980,the government and industry have been working hard to explore a sustainable development path to improve audit quality,from the revision of relevant laws and regulations to the choice of organizational form of accounting firms,The increasingly strict regulatory environment has been continuously promoting the improvement of the overall level of audit quality in China.Even if the external environment of audit practice becomes more stringent,due to the gradual development of China’s capital market,various financial scandals continue to erupt,which have set off a wake-up call for audit industry norms.Relevant regulatory authorities have taken measures to punish the offending firms and CPAs in order to reduce the probability of audit failures and improve audit quality.But what we need to think about is whether the audit failure is due to the lack of practice ability of the CPA or the weak sense of legal responsibility.This article believes that it is mainly due to the weak sense of legal responsibility of the CPA,especially the partners,and the inappropriate audit report..Therefore,based on this premise,this paper studies the impact of the legal liability of accounting firm partners on audit quality from the two dimensions of civil liability and administrative liability.The restructuring of firms has formed different forms of partnership for domestic firms,and the differences in risk commitments under different organizational forms determine different ways of civil liability.In addition,administrative penalties are one of the manifestations of administrative liability.As an alternative variable to measure civil liability and administrative liability,administrative punishment intends to deduce the impact of the legal liability of accounting firm partners on audit quality from the relationship between the transfer of the firm and the relationship between administrative punishment and audit quality.This article reviews the relevant literature on audit quality,the legal liability of partners in accounting firms,and the legal liability and audit quality of partners in accounting firms.It uses the basic theories such as principal-agent mechanism,"deep pocket" theory and "scapegoat" theory,and reputation mechanism theory.This paper analyzes the mechanism of auditing quality affected by the transformation of office and administrative punishment.Based on a review of the literature and theoretical analysis,the research hypothesis of this paper is proposed,and a model is established for empirical analysis.This article takes listed companies audited by accounting firms that achieved special general partnership transformation as the basic research sample from 2008 to2018,and uses administrative penalties of accounting firms and certified public accountants as data references to control the impact of some related factors.The following conclusions are reached:(1)After the accounting firm was transformed into a special general partnership,the scope of limited liability protection was reduced,and the increase in partners’ civil liability significantly improved the audit quality.(2)The CSRC will strengthen the supervision of penalized accounting firms,but the administrative penalties are relatively small,so that the increase of administrative responsibilities will not have a significant effect on the audit quality.(3)After the accounting firm under the special general partnership system receives administrative penalties,the partners’ legal liability increases,and the audit quality improves significantly.