The Research On Rewarding Or Punishing Auditors Against Auditing Collusion

Auditing collusion influences the audit independence seriously, having serious economic consequences. Auditing collusion not only causes serious harm to the capital market but also charges challenge to exist and development of the auditing fields. Therefore, it is very essential to study how to prevent auditing collusion.Based on economic man hypothesis and information asymmetry theory, the text sets up a principal-agent model, according to the adverse selection principle, to carry on reasoning and demonstrating, analyzing the validity of preventing collusion through rewarding or punishing the auditor, then applies the conclusion studied to the concrete supervision of auditing industry in the country.In the relationship of principal-agent, the principal engages the auditor to carry on the supervision and examine the agent's work to prevent the agent from being lazy. Because the agent's lazy behavior has randomness, principal 's ideal tactic is to implement random auditing. Not giving to the principal by auditor's report for one's own lazy behavior, the agent adopts the way that bribes the auditor by reaching conspiring. According to the agent's tactics, the principal lure the auditor not to participate in conspiring by rewarding him. However, the agent with information advantage will utilize the principal's rewarding tactics. When he bribes the auditor much more, the bonus that the principal will offer the auditor will be expected to rise day by day with increase of the agent's bribery number value. The balanced result is that the agent's lazy probability and the bonus that the principal paid are increasing constantly in the game, so that it is not valid to prevent the auditor from conspiring by rewarding him. So, the measure that the principal transfers to seek is punishment, he engage a person who supervise to examine auditor. Because the conspiracy between the agent and auditor is at random, the principal's optimum tactic is to supervise at random. When conspire is exposed and the auditor will be fined heavily, the possibility that he participates in conspiring will be reduced greatly. Therefore, compared with the situation of rewarding the auditor, it is valid to prevent the auditor from conspiring by punishing him. Our country must pay attention to considering the amount of punishing, the frequency of supervision and the size of input to supervise together when implementing the policy of supervision of auditing industry.