A Research On The Relationship Between The Influence Factors Of Audit Pricing Of Listed Companies And External Audit Effect

Independent audit plays a vital role in maintenance of the stable operation of capital market, guarantee of resource allocation of capital market as well as the stable economic development of the entire society. Therefore, the function of independent audit is obvious in present capital market. However, one factor affects independent audit to play its role, namely the audit quality. Nevertheless, it is difficult to observe the audit quality directly, so it is necessary to examine it by other observable phenomenon. Audit charge is one of them. The impact of audit charge on audit quality can be reflected as follows:First, the auditor’s professional competence lies in strong human security, and high quality audit talents are attracted and concentrated by the reasonable audit charge. Second, with certain professional competence, the possibility to find out the fraud of audited entity is determined by its invested resource. According to rational economic man assumption, the amount of audit cost the auditor invested is restricted by the amount of audit charge. Third, the threat of dismissal from the audited entity for the audit charge and the competition of all firms for clients to decrease audit charge can definitely damage the independence of audit.The audit pricing is the price aimed at audit service supply and demand agreed by auditors and audited entity for the maximized bilateral benefit. According to rational economic man assumption, for audited entity, the audit price is the cost of purchasing audit service which affects the profit of enterprise on that year. Therefore, to make sure the client to accept certain quality of audit service, the value of audit service must outweigh the cost of purchasing audit service. Based on the same assumption, for the accounting firms, since audit charge will become operating income, which will lead to the increase of profit, therefore, the motivation of accounting firms to offer audit service actively only comes from the audit income which is higher than the cost of offering audit service. A large number of enterprises will consider the price of audit as an important factor when they choose an accounting firm, while the accounting firms choose to provide different level of audit service based on the amount of audit charge. Therefore, to achieve effective audit demand and audit supply, the audit charge should meet the profit demand of both demand part and supply part. In China, audit service is offered by accounting firms, which is a special product paid by audited entity. In this paper, audit pricing is defined as measurable monetary reward gained by accounting firms after providing audit service.Audit quality refers to that with the guarantee of independence and professional competence, audit organizations and staff, namely the audit subject, act on the audit object, namely audit targets and audit contents, to generate an objective effect, which includes the quality and result of audit as well as the efficiency and effectiveness of audit subject. There are many factors affecting the audit quality:1) the size of accounting firms, accounting firms’degree of control of audit service, the legal obligation the accounting firms should shoulder, non-audit service of accounting firms, etc. those factors affect audit service from the perspective of accounting firms; 2) the factors in terms of listed companies:the size of listed companies, the industry and location of listed companies, the companies’operation structure, whether pay attention to internal audit, financial structure, company policies, etc.; 3) the factors in terms of audit market:the degree of the development of the audit market, whether the audit pricing phenomenon of "low price to attract clients" and "opinion shopping", the degree of strictness of supervision.