The Research On Incentive And Restrictive Mechanism Of Accounting Firms

Since our government restored CPA auditing system in the beginning of 1980's,as an independent unity, accounting firms have made a huge contribution to the development of economy and protected the interest of the public, and are becoming a necessary component of the market economy.But there are still many problems in this industry. The accounting firm provide fraudulent audit reports for economy benefit , liquidity of the certified public accountants is too big, accounting firms' development are limited. These problems have reference to the interior governance of the accounting firms more or less, especially with incentive and restrictive mechanism of accounting firms. On one side we should constrain CPA to confirm the quality of accounting report, one the other side the accounting firms should encourage CPA to work hard for the benefit of firms.The encouragement and constraint system of CPA is composed of administration of government, autonomy of CPA Association ,management of accounting firms self-control of CPA and public supervisal . And management of accounting firms is the directest and most important part. This thesis studies the encouragement and constraint system of CPA at the position of accounting firms .It analyses current situation of encouragement and constraint system in accounting firms in China, studies the management of performance appraisal theory and compensation management theory, uses the advanced experience of the big four for reference, founded a better incentive and restrictive mechanism of accounting firms .In view of the different accounting firms, this thesis has separately designed the small scale accounting firms' simple mechanism and the large and middle scale accounting firms' mechanism. For partners I choose the compensation mechanism which is compose of the compensation based on performance and the dividend. For other CPA, I design a compensation mechanism which is composed of basic wages, experience salary, technology and ability salary and performance salary. At the same time, this thesis emphasizes that the incentive and restrictive mechanism of accounting firms should encourage CPA spiritually as well as gives them money and career ladder.