Research On The Effects Of National Audit Supervision

Since the establishment of the national audit system in 1983,national audit has been a hot topic in our academic and practical circles.In the third Plenary Session of the 18th CPC Central Committee,a top level design was made for the comprehensive deepening of the reform,in which "amplifying strict financial budget,approval and audit system","strengthening administrative supervision and audit supervision"emphasized the supervision role of national audit.In 2018,"The state council’s opinions on strengthening audit work" once again explicitly puts forward"strengthening the supervision role of national audit".The nineteen major reports of the party clearly put forward "perfecting the national audit supervision system and reforming the auditing management system"After 35 years of development,China’s national audit has made remarkable achievements.Every year National Audit Office exposes illegal and irregular problems and plays an important role in the realization of the state’s good governance.China’s national audit is based on the different audit objects and contents,and supervises the operation of the public power of the government and improves the operation of the government.The important role of government credibility and national good governance is gradually reflected.On the other hand,with the development of national audit,the events of violating laws and rules in such audit objects as the government departments,listed companies and accounting firms,have been publicly disclosed.Therefore,national audit should not only expose the problems existing in the audit entities,but also continue to pay attention to the reform of the problems,the performance of responsibility,the implementation of the policy measures and so on,which effectively realizes the supervision effect of the national audit.Based on the theory of national audit and on the perspective of audit objects,this paper discusses the effect of national audit on the supervision of different audit objects.From the perspective of empirical research,the empirical experience of national audit is used to promote the development of government departments,state-owned enterprises and accounting firms.First of all,from the effect of national audit on the supervision of the government departments,this paper uses the grey system theory to evaluate the effect of national audit on the supervision of the government departments by using nine indexes,such as the proportion of the already paid financial proportion.The study has found that the effect of national audit on the supervision of government departments has been staged,and at the same time the supervision effect has gradually been increased in each stage.The main reason for this trend of change,on the one hand,is that the influence of the macroeconomic environment,such as the influence of the international financial crisis on China in 2008,leads to the effect of the national audit supervision not obvious or even negative.On the other hand,the supervision of the national audit is more and more effective with the fact that the national audit theory and practice are continuously enriched and perfected.As a result,the role of national audit plays a more and more important role in promoting and improving national governance.Secondly,on the basis of the signal transmission theory,from the two aspects of the stock market and the capital market,from the two time dimensions of the first and second audit of National Audit Office,this paper examines the effect of national auditon the state-owned enterprises.From the perspective of stock market,event study is used to examine the market reaction of audit results announcement.The study confirms that the national audit announcement has a significant negative impact on the share price of the listed company.Furthermore,compared with the first announcement of national audit,the share price reaction of Listed Companies in the second announcement of national audit is more negative.From the capital market,the regression results confirmed that national audit can promote central enterprises’operating performance of listed companies further.What’s more,compared to the national audit announcement at a time,the national audit second announcement can more significantly improve the central enterprises’ operating performance of listed companies.Finally,in view of the effects of national audit on the supervision of the accounting firms,this paper uses Propensity Score Matching Method(PSM)and Difference-in-differences Model(DID),from two aspects,the audit quality and the audit fee,of the accounting firms,in order to examine the effects of national audit to the accounting firms from the following three angles:the first,the second and the overall audit.It is found that national audit can significantly improve the audit quality of accounting firms.Furthermore,the effectiveness of national audit on accounting firms mainly comes from the second audit rather than the first one.National audit has no significant impact on audit fees of accounting firms.Neither once,two times nor overall audit has significantly raised audit fees of accounting firms.The main innovations of this article are as follows:(1)From the perspective of different levels of audit objects,we systematically studied the supervision effect of national audit on different audit objects in China,and found some basic rules.From the perspective of the government department,the national audit supervision effect is periodic in both the central government and local government,and the supervision effect is gradually increasing at each stage.This stage is mainly influenced by the macroeconomic environment(such as the world financial crisis).At the same time,this kind of rise is the result of the continuous development,enrichment and perfection of national audit in China.The supervision effect of national audit has been gradually enhanced,and the role of national audit in promoting and perfecting the state governance is becoming more and more important.From the point of view of the enterprise,in the stock market,the national audit has a significant negative impact on the stock price of the listed companies,and in the capital market,the national audit can significantly improve the operating performance of the listed companies.This seemingly contradictory result is essentially unified in the governance function of national audit.In the short term,the national audit announcements state the problems in the process of the operation and management of the listed companies in the society,which immediately causes the fall of the stock,and the decline of the stock price encourages the listed companies to improve the management and to increase management efficiency.In the long run,the supervision of the national audit has finally promoted the business performance of the listed companies.National audit has the supervision role of "good medicine bitter mouth"for state-owned enterprises:the short-term "bitter mouth" leads to the fall of the stock price,while the ultimate aim is the long-term "good medicine" effect.The good medicine will inevitably form the improvement of the company’s performance.From the perspective of accounting firms,national audit can significantly improve the audit quality of accounting firms,but has no significant impact on audit fees.(2)The national audit is divided into the first national audit and the second(including multiple)national audit,and the supervision effect of repeated audit and follow-up audit is investigated thoroughly.From the perspective of enterprises,in the stock market,the second national audit is more negative in share price than the first national audit,and it can play a stabilizing role in the stock market.In the capital market,the second national audit can significantly improve the business performance and efficiency of enterprises than the first national audit.From the perspective of the accounting firms,the national audit can significantly improve the audit quality of the accounting firms,but this effectiveness mainly comes from the effect of the second national audit rather than the first national audit.In summary,the effectiveness of national audit supervision mainly comes from the supervision effect of the second audit.The second audit is better than the first one.(3)We try to use different empirical research methods to study national audit.Because of the lack of data and uncertainty in the national audit data of government departments,the author adopts the grey system research method and uses multiple indicators to analyze the effect of national audit on the supervision of the government departments.The national audit of state-owned listed companies is studied from two aspects:stock market and capital market,respectively.The method of event study is to study the short-term supervision effect of national audit on enterprises,and the multiple regression method uses large sample data to study the long-term supervision effect of national audit on enterprises.As for the national audit of accounting firms,the author uses the propensity score matching method and the dual difference model to study and minimize endogenous problems,so as to make the research conclusion more robust.This article is divided into seven chapters.The first chapter is the introduction,which mainly introduces the background and significance of the research,the ideas and methods of the research,the content and framework of the research,the definition of the basic concepts,and the innovation and deficiency of this article.The second chapter is the literature review,which mainly combs and summarizes the research literature on the effect of national audit supervision by domestic and foreign scholars.The third chapter is the theoretical basis.It mainly expounds the basic theories of national audit theory,national governance theory,principal-agent theory,new public management theory and signal transmission theory.The fourth,fifth and sixth chapters examine the supervision effect of national audit from three aspects——government departments,state-owned enterprises and accounting firms,respectively.The seventh chapter is the conclusion and policy recommendations.It outlines the research conclusions,innovation,limitations and prospects,and puts forward relevant policy recommendations.