Research On The Influence Of Administrative Penalty Of China Securities Regulatory Commission On The Audit Quality Of Lixin Certified Public Accountants

In the capital market,the assurance services provided by accounting firms have an important responsibility to ensure the quality of external information of companies and are vital to the smooth operation of the economy.China’s CPA industry developed late and after a period of restructuring and mergers,the scope of business of local accounting firms has increased,but there have been some cases of audit failures due to the low quality of audits.In addition to this,the newly introduced reform of the registration system has placed higher demands on audit quality.As a result,the recent Securities Law not only imposes stricter regulation on the quality of information disclosure by listed companies,but also increases the penalties for accounting firms whose audit failures occur as a result of low audit quality.So,did the SFC’s administrative penalties improve audit quality? If they did improve audit quality,how did the administrative penalties affect audit quality? In order to answer the above questions,this thesis selects Lixin CPA firm,which was subject to a series of administrative penalties by the SFC between 2016 and 2018,as the subject of the study.Firstly,the basic situation of Lixin’s administrative penalties is analysed;secondly,three audit quality measures commonly used in academia,namely the DA value of manipulative accrued profits,audit opinions issued by the firm and the firm’s audit service fees,are combined to assess how Lixin’s audit quality has changed after the penalties by observing and analysing the changes in the relevant indicators;thirdly,in order to more accurately understand the current SEC administrative penalties on the audit quality of accounting firms in China,an analytical framework for audit quality is established in conjunction with relevant literature.On this basis,this thesis also looks at surplus management and internal control of listed companies,risk management,internal management and audit input of accounting firms,and examines how the administrative penalties of the SFC in China affect audit quality,which will help us understand more deeply the mechanism of the impact of the SFC’s administrative penalties on audit quality and provide some suggestions and insights.The conclusion of this case study is that,in terms of the relevant indicators,the audit quality of Lixin CPA Firm did improve after it was subjected to administrative penalties by the SFC,thus showing that administrative penalties can indeed discipline CPA firms,and this effect is achieved by prompting CPA firms to strengthen risk management and internal management,increase audit investment and force listed companies to reduce surplus manipulation and improve internal control This is achieved by forcing listed companies to reduce surplus manipulation and improve internal controls.Firstly,from the perspective of accounting firms,they need to carry out audit quality control,change the mode of undertaking business,pay attention to risk assessment,improve branch office management and establish a reasonable talent introduction mechanism.Secondly,from the perspective of external supervision,the government needs to strengthen its supervision and give full play to the role of the CPA Society and public supervision to improve the effectiveness of supervision.