Legal Liability,Government Intervention,and Auditor Behavior: Evidence from Structural Reform of Audit Firms in China

This paper investigates how legal liability influences audit quality and audit fees, particularly in the presence of government intervention. Since 2010, all Chinese audit firms were required to transform from a structure of limited liability company (LLC) to limited liability partnership (LLP), which removes the cap on the liability exposure of negligent auditors. By adopting this natural experiment, we document the following findings: first, after audit firms reorganize as LLPs, auditors are more likely to (1) issue modified audit opinions and going-concern opinions, (2) constrain clients’ earnings management, and (3) charge a premium in audit fees, which suggest that exerting unlimited legal liability on negligent auditors improves both audit quality and audit fees. Second, the effect of the LLP adoption is more pronounced when auditors are from local audit firms, and clients are controlled by local governments. Further analyses suggest that the stock prices of clients positively react to the reform event, which indicates that LLP adoption improves the overall value of audits. In summary, our empirical findings are consistent with the argument that legal liability is able to effectively shape auditor behavior in emerging markets where the other institutional mechanisms are relatively weaker and government intervention is heavy.     

Do (Fe)Male Auditors Impair Audit Quality? Evidence from Going-Concern Opinions

Recent research indicates that there may be a relationship between the characteristics of the audit engagement partner and audit quality. In this paper, we examine the relationship between audit quality and the presence of a female or male audit engagement partner. We use the likelihood that an auditor issues a going-concern opinion (GCO), conditional on the client's financial situation, as an indicator of audit quality. Using a sample of 7105 financially distressed, private Belgian companies, we find that female auditors are, ceteris paribus, more likely to issue GCOs than male auditors. Our results also show that this effect is stronger when clients are either important (i.e. represent a material portion of the auditor's revenues) or high-risk (i.e. associated with increased uncertainties and risks). Collectively, these results indicate higher audit quality by female auditors.     

Audit Services and Fees of Large Accounting Firms

In the audit literature, it was postulated that audit firms are differentiated due to their quality and, thus, the fees charged are a function of quality. We hypothesize that this may lead to audit firm specialization in different amounts of auditing, leading to a differential audit fee structure. This hypothesis is empirically tested by using a very large sample of audit fees paid to then Big Eight auditors. The results are consistent with the hypothesis in that three Big Eight auditors are observed to charge significantly different fees when compared with the other firms.     

议审计表达中的数字瑕疵

由于审计工作是高度数字化的工作,它要求审计人员尽可能以简洁的数字涵盖大量审计信息,以使同仁和公众一目了然的了解审计业务全过程。但在常规审计工作中,笔者时常注意到某些审计表述上的瑕疵甚至是重大缺陷,影响了审计工作质量,有鉴于此,笔者将审计实务中多发的数字表达瑕疵情形及原因作如下抛砖引玉式的评议,以期更好推动审计工作规范化。     

Secrecy Culture and Audit Opinion: Some International Evidence

We examine whether and how auditors respond to audit risks arising from secrecy culture when making audit opinion decisions. Using a sample of international Big N auditors from 33 countries, we find strong and robust evidence that auditors are more likely to issue modified audit opinions to clients domiciled in countries with a strong secrecy culture. In addition, we find that the association between secrecy culture and auditors' propensity to issue modified audit opinions is less pronounced in countries with strong investor protection than that in countries with weak investor protection.     

股权代理问题与高质量审计需求研究综述

本文对股权代理问题与高质量审计需求的研究进行了综述,结果表明,国外研究发现股权代理问题影响了审计需求,股权代理问题越高的公司,更倾向于聘请高质量审计师,而我国的研究刚刚起步并存在不足。本文认为,未来的研究重点在于研究高质量审计师的替代变量;控股股东的掏空行为是否影响其审计师的选择等方面。     

Audit Fees in a Joint Audit Setting

Abstract

This paper uses the uniqueness of the French audit environment to conduct an in-depth study of audit pricing issues associated with the requirement to hire two independent auditors (joint audit). I use a model derived from Simunic's [(1980). The pricing of audit services: Theory and evidence. Journal of Accounting Research, 18(1), 161–190] seminal work to examine to what extent audit fees are influenced by the number of Big 4 joint auditors (zero, one, or two). After controlling for well-known drivers of audit fees that are specific to audit client firms (size, complexity, and risk), for governance characteristics and for auditor selection, the paper shows that the decision to hire two Big 4 auditors as joint auditors does not require the payment of a higher Big 4 premium compared to the choice of one Big 4 auditor paired with a smaller auditor, other things being equal. The choice of two Big 4 auditors thus appears to be a rational economic choice for large and international firms.     

投资者认知、审计质量与公司价值

投资者认知是决定市场资源配置的重要因素,认知水平越高,公司价值越大。审计作为一种降低信息不对称的制度安排,能够影响公司信息传递,进而正向调节认知效应;审计还具有缓解代理冲突的功能,而代理成本与审计质量存在对应关系,因此审计质量也体现为对认知效应的负向调节。我国股市目前主要体现为后一种情况,表明审计提升公司价值的主要路径是缓解公司的代理冲突,公司对高质量审计的需求动机远比满足投资者信息需求的动机更为强烈。聘用大型事务所能够向市场投资者传递积极信号,对认知提升公司价值的效应有正向调节作用。审计模式选择需要考虑公司的信息传递特征,并与投资者对公司的认知水平相契合。     

The Audit Reporting Debate: Seemingly Intractable Problems and Feasible Solutions

While the audit reporting debate has a long history, a number of recent regulatory initiatives and policy reviews increase the likelihood of change in this area. The purpose of this study is to use this momentum and examine whether there is consensus between audit report users and auditors with regard to the form and content of the audit report. This seems necessary because past audit reporting reforms have failed due to a lack of common ground. Based on interviews with users and auditors, we conclude that reaching a level of consensus seems feasible. Using these insights, we propose an alternative audit reporting model that may significantly reduce the information gap between users and auditors and improve transparency on the quality of audit practice.     

审计师性别组成对审计质量、审计费用的影响——来自中国的经验证据

以2001年—2008年中国A股上市公司为研究对象,考察签字审计师性别和性别组成对审计质量和审计费用的影响后发现,女性组审计师可以在5%的显著性统计水平上增加负向的操纵性应计利润,审计师的性别组成与绝对的、正向及负向操纵性应计利润并无显著关系,女性组审计师及混合组审计师的审计费用都要显著高于男性组审计师。研究结论为审计师性别组成对中国审计市场的影响提供了重要的经验证据。     

国有企业内部审计整改的问题与应对措施

作为审计工作程序中的重要组成部分,审计整改既是展现审计成果的重要抓手,又是体现审计价值的方式之一。审计整改关乎企业内部审计的作用能否正常发挥,关乎企业治理、风险管理、内部控制等各项管理的质量能否有效提升。但当前,我国国有集团企业的审计整改存着许多影响审计效能提升的问题。论文研究了新时代审计整改的内容,分析了当前国有企业内部审计需要整改的问题,探究其应对措施,以期推进整改工作的顺利进行与整改效果的有效提升。     

The Effect of Arthur Andersen's Demise on Clients' Audit Fees and Auditor Conservatism: International Evidence

Using samples from 12 non‐U.S.A. countries, we find that following Arthur Andersen's failure in the United States of America, successor Big‐N auditors charged an audit fee premium for ex‐Andersen clients compared to existing clients and non‐Andersen switch‐ins. We show that this audit fee premium is not attributable to the Andersen switch‐ins having lower prior earnings quality or lower bargaining power than non‐Andersen switch‐ins. We also show that ex‐Andersen clients exhibit higher earnings quality after the switch than do ongoing clients and other switch‐ins. These results suggest that the audit fee premium is attributable to auditor conservatism. Furthermore, we find that risk assessments for ex‐Andersen clients are higher in countries with weak legal and extra‐legal institutions. We interpret this result as suggesting that the effect of lost auditor reputation is stronger when objective evidence of earnings quality is uncertain because of weaker supporting institutions. This is the first study to document a direct effect of countrywide institutions on audit risk assessment.     

低质量审计是审计师个人特质导致的特例吗？——基于“污点”签字注册会计师的研究

在签字注册会计师层面研究低质量审计的发生原因时发现:审计失败被发现前,与同所未受罚签字注册会计师相比,受到证监会处罚的签字注册会计师的审计质量持续较低;部分受罚签字注册会计师因事务所合并而被动进入质量控制较好的环境中,其审计质量较合并前有显著改善。这说明在相同质量控制体系下,低质量审计是由审计师个人特质导致的特例;而良好的质量控制有助于抑制"污点"签字注册会计师个人特质对审计质量的不利影响。     

Audit committee effectiveness and the audit fee

The UK is the only major country within the European Union the majority of whose listed companies have formed audit committees composed of non-executive directors to monitor financial reporting, the external auditors, and internal control strength. The adoption of audit committees in contrast to the approach in Europe has arisen despite the lack of evidence on their effectiveness even in the USA and Canada, where they have been mandatory since the 1970s. This paper seeks to establish whether audit committees are effective in ensuring audit quality by protecting the auditors from fee cuts which might affect audit quality, and signal tighter internal controls which help to reduce audit time and hence audit fees. The problem is that the audit committee may be expected to exert a two-way pressure on audit fees. To the extent that audit committees should enhance audit quality, partly by ensuring that audit hours are not reduced, an audit committee may be expected to increase total audit fees. At the same time, an audit committee may reasonably be thought to be a proxy for internal control strength. Ceteris paribus, companies with strong internal controls may be expected to pay lower audit fees than those with weak internal controls. Our paper argues that the ‘quality’ aspect of the audit can be captured through a dummy firm size variable, whilst the internal control aspects can be captured through dummy risk and complexity variables. The hypotheses examined are that size related audit fees are higher in companies with an audit committee; and that risk- and complexity-related audit fees are lower in companies with audit committees. The hypotheses are tested by developing a regression model for audit fees of a sample of the companies which comprise the FT-SE 500, with variables being included for the presence or absence of an audit committee. The results show that the relationship between size-related audit fees and the presence of an audit committee is positive and statistically significant, but that although there is a negative relationship between risk- and complexity-related audit fees and the presence of an audit committee, the relationships are not conclusively significant. The findings provide support for the contention that audit committees are at least partially effective in preventing reductions in the audit fee to levels where the quality of the audit may be compromised.     

跨市场上市公司审计定价研究

本文从我国跨市场上市公司审计师选择的特点出发,考察了境内外审计市场不同需求弹性对审计收费的影响,并对协同效应和范围经济对审计定价的影响进行了研究。结论表明,当审计师对境外报表进行审计时,“四大”的审计收费显著高于非“四大”。而当会计师事务所对境内报表进行审计时,“四大”的审计定价与非“四大”相比无显著差异。结论验证了“四大”不同市场不同定价的竞争策略,如果进行审计的会计师事务所之间可以实现协同效应或范围经济,从而能节约跨市场上市公司的时间和精力,上市公司将愿意付出更多的审计费用。结论支持了境内会计师事务所可以通过与境外会计师事务所建立联系构筑竞争优势的策略。     

关于提高军队审计工作质量的思考

审计质量是军队审计工作的生命线,直接影响着军队审计的权威性。本文从审计内控制度、审计队伍建设、审计程序执行三个方面分析了影响军队审计质量的因素,从强化审计内部管理、提高审计队伍素质、实行全流程质量控制等方面提出了改善军队审计质量的对策,其中着重论述了从审计方案制定、审计过程实施、审计结果运用到审计问题回访等工作流程中应重点控制的关键环节和工作方法,为提高军队审计工作质量和效率提供了一定的思路。     

基于经济责任审计的我国党政领导干部责任履行情况研究

选择可以量化的反映审计投入力度的审计查出金额、被审计人员数量、省级审计人员数量和审计报告量实证分析我国党政领导干部经济、社会责任目标的实现程度,研究发现:经常性考核党政领导干部的指标反映程度强于非经常性指标;真实性、合法性责任反映程度强于效益性责任的履行;各类支出项目的减少反映程度明显高于收入的增加;审计出金额、省级审计人员量和审计报告量的作用明显强于被审计人员数量的作用。     

审计定价与“中签者之祸”及其思考

鉴于对低价进入式审计定价策略的关注,本论文评述了一个审计市场二阶段竞价模型。在这个模型中,审计成本包括两个部分:对所有可能的审计人员一致的共同审计成本和因具体审计人员而异的个别审计成本。正是由于这部分共同审计成本的存在,导致了“中签者之祸”情况的产生。论文认为,经验丰富的审计者通过改变审计竞价策略,以补偿“中签者之祸”带来的损失。这一点,对于“低价进入式竞价策略”(第一阶段审计价格的降低)的程度和审计人员的变更,起着重要的作用。在二阶段审计竞价模型中,“低价进入式竞价策略”与审计质量损失无关。基于上述分析框架,作者简要地陈述了我国审计服务市场的收费情况并做出了相关评论。     

Mandatory Audit Firm Rotation and Audit Quality

In a setting where mandatory audit firm rotation has been effective for more than 20 years (i.e. Italy), we analyse changes in audit quality during the auditor engagement period. In our research setting, auditors are appointed for a three-year period and their term can be renewed twice up to a maximum of nine years. Since the auditor has incentives to be re-appointed at the end of the first and the second three-year periods, we expect audit quality to be lower in the first two three-year periods compared to the third (i.e. the last) term. Assuming that a better audit quality is associated with a higher level of accounting conservatism, and using abnormal working capital accruals as a proxy for the latter, we find that the auditor becomes more conservative in the last three-year period, i.e. the one preceding the mandatory rotation. These results are confirmed using Basu's [1997. The conservatism principle and the asymmetric timeliness of earnings. Journal of Accounting and Economics, 24(1), 3–37] timely loss recognition model. In an additional analysis, we use earnings response coefficients as a proxy for investor perception of audit quality, and we observe results consistent with an increase in audit quality perception in the last engagement period.     

Toward the Effect of Audit Quality on Earnings Management——Empirical Evidence from Manufacturing Enterprises Listed in Shanghai Stock Market

Nowadays, earnings management is a hot issue, but most of the researches focus on the incentives of earnings management and few of them refer to the effect of audit quality on earnings management. In this study, we directly examine the effect of external audit quality on earnings management by using discretionary accruals. We find that the discretionary accruals of non-dual audit companies are significantly greater than those of dual audit companies. We also find that clients of non-First Ten auditors intend to report greater discretionary accruals than those of First Ten auditors.