The Analysis Of Relationship Between Audit Quality And Financial Restatement

Financial statement as the carrier of accounting information, not only the important channel for investor obtained business information, but also the basis for investors to make investment decisions. With frequently false accounting information has been found in domestic and international, the reliability of financial statements has been questioned more and more, while the phenomenon of financial restatements have been drawing more attention. The phenomenon of financial restatements has been increasing in recent years, the United States as the most developed and the highest level of accounting in Western countries, financial restatement is gradually increasing. Although in recent years, there is no obvious upward trend on financial restatement in our country, but the phenomenon of using significant accounting errors to adjust profits is obvious, and it is ambiguous of repeating statement error. So we can see, financial restatements is not simply correcting accounting errors, it has already become a tool for manipulating profits. So, the financial restatement not only affect the value of their own, but also damage the interests of investors. We can see that there is necessary to restrain the occurrence of financial restatements.The company’s annual report published to the public is already audited by certified public accountants, we can say audit is the last line of forensicing the quality of accounting information, because of information asymmetry, investors need an independent third party financial listed companies make a real and effective identification of the report, the level of audit quality is directly related to the interests of investors. But the audit quality has been questioned because of the financial restatement, people always think that the financial restatement is the failure of the audit, as the external auditors, financial experts must take responsibility for it. In foreign markets, the financial restatement means that the poor quality of audits, investors will doubt the independence of auditors, it might lead to litigation. So, does financial restatement related to the level of audit quality? Should an independent third party audit to take some responsibility for the phenomenon that taking advantage of significant accounting errors to adjusting profits? Can we reduce the incidence of financial restatements through improving the quality of external audit? These issues well be answered in this article.Most previous studies are based on the relationship between audit quality and financial restatement, then researching the impact of factors on audit quality, few of study directly talk about the relationship between audit quality and financial restatement. This article changed this angle, directly analysis the relationship between audit quality and financial restatement.In this paper, use financial restatement as the research object, selecting the appropriate standards to measure the companies’audit quality, then analysis the negative correlation between audit quality and financial restatement so that we propose to further suppress the phenomenon of financial restatements. This article follows the theory with reality, using normative analysis and positive analysis method. In order to achieve the intended purpose of the study, the article first making concepts of audit quality and financial restatements, then analysis the theoretical of the relationship between audit quality and financial restatements. Through the analysis of theoretical to drawing the hypotheses of the. research. According to this idea, the paper is divided into the following sections:Part 1 is an introduction, mainly puts forward the problem, discusses this research background, research goals, significance and research methods and research framework of this article.Part 2 is talk about audit quality and financial restatements for the study of literature review. In this paper, this part of the first measure of audit quality research status at home and abroad, financial restatement issues related to research status and audit quality and financial restatements related to the relationship between domestic and foreign research are surveyed in detail and then related to the above question of a simple comment.Part 3 is for audit quality and the theory of financial restatements. First, this part of the main problems studied in this paper to define the main concepts, including the concept of audit quality, the concept of financial restatements. Secondly, the introduction of the restatement of financial information disclosure system. Finally, the relevant measure of audit quality theory was expounded that we choose the measure of audit quality provides theoretical support.Part 4 is the relationship between audit quality and financial restatements empirical research, this section includes research design and empirical analysis. First proposed in the study design, hypothesis of this article, followed by econometric models of earnings management are discussed and options, and sample selection were also conducted on each variable a specific description, on this basis to construct the regression model. Empirical analysis is divided into descriptive statistical analysis and Logistic regression analysis of the research hypotheses were verified.Part 5 is the research findings and policy recommendations. This section concludes this article are described, relevant policy recommendations are given, and the limitations of this study are described.In brief, this article changed the way that using the relationship of audit quality and financial restatement as the premise of the research about the influence factor on the audit quality, has placed directly the angle of view on the relationship of the audit quality and financial restatement. This article unified the method using the standard and the real, the final outcome has confirmed this article research supposition. Therefore, we can restrain the financial restatement through improving audit quality.