The Research On The Behavior Of The Accounting Firms Under Special General Partnership Reforming

In August2006we revised the partnership enterprise law, in July2010ministry offinance issued a regulation on the large and medium-sized accounting firm to promotethe use of special general partnership firm, and in January2012the ministry of financeadjusted a notice about the accounting firms engaged in business related to securities.Under the policies and regulations, the organization form of accounting firm had beenchanged. At present, the audit market lacks high quality requirements, so therequirements to audit quality are not high in audit industry. In the initial of the firms setup, most of them choose the form of limited liability. Compared with the partnership,the CPAs assume the responsibility limited to their investors in Limited LiabilityCompany. Thus it will weaken the shareholders’ risk and the shareholders would burdendouble tax liability. From these aspects, the limited liability has its defects compare withspecial general partnership. Therefore the scholars in theory appeals to reform theorganization form of the accounting firms, in order to enhance the audit quality andstrengthen the quality controlling. This paper analyses the influence of the organizationform reforming on the accounting industry.The existing literature concentrated in the theory analysis about the organizationform reforming of the accounting firms. These papers analyze the pros and cons of thespecial general partnership and then put forward some policy suggestion about theorganization form reforming in CPA industry. But almost none of the articleconcentrated on the empirical study about the effect of the policy. Therefore, this paperwill make an empirical analysis of the impact of organization form reforming from auditquality(audit opinion), audit fees and quality control(the client to undertake andmaintain).This paper researches around the reforming of organization form in accountingfirms. We use the10accounting firms as the sample data,5of which had been reformedand others are not in2011. The results of this study are:(1) the angle of audit quality:the accounting firms which had reformed the organization form have high audit qualitythan before. But the audit quality between the special general partnership and limitedliability firm are not deferent.(2) the point of audit fees: the audit fees of the specialgeneral partnership is higher than before. The audit fees of the special generalpartnership are higher than the limited liability firms’.(3) the angle of customer choose:whether comparing the special general partnership firm with itself or comparing the special general partnership firm with the limited liability firm, all the accounting firmswould take account to the financial characteristics of the customers the accounting firmsundertake. Finally, according to the empirical results, we will set up three suggestions ingovernment regulation, the risk awareness of the firms and charge the audit fees in orderto improve audit quality and strengthen quality control.