The Audit Relationship With The Independent Audit System

Auditing scandals happened recently cause argument about independent auditing system and a lot of researchers have been publishing their researching results. In this thesis, I have analyzed independent auditing system based on auditing relationship and given my suggestions.This thesis includes 4 chapters. The first: foreword, the second: auditing relationship and independent auditing system, the third: the change of auditing relationship and our choice, the fourth: suggestions.The first chapter contains researching motive and framework of this thesis.In second chapter, I analyzed the problems of independent auditing system, what the problems cause is false auditor's report. There are many different researching conclusions about the reason of false auditor's report such as flaws of enterprise governing, retaining system of CPA and problems of paying system; at the same time, different suggestions including perfecting enterprise governing system, reforming the retaining system , increasing CPA's law responsibility , strengthening supervision are given. After having analyzed the conclusions and suggestions above, I think all of them hadn't reached the core of independent auditing system: auditing relationship.The third chapter focuses on the auditing relationships derived from different principal-agent relationships, I think that there're 3 different levels of auditing relationships in modern enterprise, the bottom level is the auditing relationship: manager as auditreceiver, accountant as auditee, CPA as auditor, and this auditing relationship is derived from the principal-agent relationship between manager and accountant. The medium level is the auditing relationship: board of directors as auditreceiver, manager as auditee, CPA as auditor, and this auditing relationship is derived from the principal-agent relationship between board of directors and manager, the top level is the auditing relationship : shareholder meeting asauditreceiver , board of directors as auditee, CPA as auditor , and this auditing relationship is derived from the principal-agent relationship between shareholder meeting and board of directors . My analysis is based on the theory of principal-agent and the theory of information. With the theory of principal-agent, independent auditing system should be established on the base of the auditing relationship which shareholder meeting acts as auditreceiver, but shareholders' dispersing makes it difficult for shareholder meeting to protect their interest. With the theory of information, accounting information is the qualitative report of an enterprise, when everyone can become a buyer of the product in capital market, government should take the responsibility of protecting public interest and act as auditor or employ experts to audit the accounting information.In the fourth chapter, I gave my suggestions, in my opinion, the combination of financial report accreditation system and financial report sampling system would be the most efficient, effective, economy system.