The Influence Of Internal Control Attestation On Audit Fees And Auditor Choice Of Reporting Tactics

Based on internal control attestation reports and related financial data of 2008-2009 disclosed by listed companies in Shanghai and Shenzhen Stock Exchange, this paper tried to use empirical research to investigate the influence on audit fees caused by issuing attestation report on internal control and whether auditors choose different tactics when they are voluntary to issue internal control attestation reports. The study found that in the background of voluntary issuing, most opinions of the internal control attestation reports are clean. In general, the increasing cost and risk caused by issuing internal control attestation reports is not enough to offset the decreasing cost an risk of auditing on financial statements, so issuing internal control attestation reports significantly negative correlated with audit fees. However, the first issuing increases audit fees, but not significant. In consideration of avoiding potential legal responsibility and audit risk, auditors will determine whether internal control attestation reports be issued according to the achievement of the goals of client's internal control.The main content of this paper includes the following parts:Chapter 1 is introduction, which mainly introduces the background, significance, briefly train of thought and frame of the paper. The innovation points are also put forward in this chapter.Chapter 2 is literature review. Based on audit fee, the influence on audit fee caused by audit risk and internal control, auditor's tactics on issuing internal control attestation reports, this paper reviews and summarizes related important literature.Chapter 3 is theory basis. First of all, the transition and current situation are introduced, the influence of internal control attestation on both supply and demand in audit market is also analysed; Second, some related basic theories are introduced, including audit pricing theory, audit risk theory, signalling theory and auditor's tactics theory, which provides theoretically support for the following empirical research.Chapter 4 is empirical research,the main body of this paper, which is divided into three parts:1.The research on influence of internal control attestation on audit fee; 2.Special consideration on first issuing internal control attestation report.3.The auditors'tactics of issuing. Each part includes proposing hypotheses, explanatory and explained variables choice and measurement, the construction of empirical model, the selection of data and empirical result reporting and so on.Chapter 5 analyses the countermeasures aiming at the problems which the empirical research reveals and the limitation of the research. Firstly, comprehensive analysis is carried on aiming at the conclusions which chapter 4 has proposed. According to the results of the analysis, judgment of the current internal control attestation market is made. The proposal of how to further regulate internal control attestation business is discussed as well. Secondly, this chapter points out the limitations of the paper and future research direction of this kind of research.