The Impact Of Consolidation Of Certified Public Accountants On Audit Market Structure And Audit Fees

China’s audit industry has experienced several major mergers among accounting firms since1998. In2007, the Ministry of Finance and the CICPA (Chinese Institute of Certified Public Accountants Association) put forward the "bigger and stronger" strategy, which spurred the largest upsurge of merger. The mergers greatly improved the scales of local accounting firms, exerted a far-reaching impact on the overall audit market pattern and their own development. However, the question of "bigger but not stronger" also emerged from that. Therefore, the starting points and final purposes of this paper mainly focus on three aspects, namely the present result of local firms’mergers, the existing issues of mergers and the better way to exert positive effects.In accordance with the economic results caused by merger, there is no final conclusion in the current empirical researches. Some scholars believe that merger generated no obvious effect on audit fees as their competitiveness was still strong. Others believe that there were strong links between firms’scales and the audit fees:the firms’ scales will be expanded with the increase of audit fees. This paper, firstly after measuring the market structure based on the CR(Concentration Ratio) values, has found that merger boosted overall domestic market share and narrowed the gaps between different firms. Secondly after conducting empirical analysis on individual cases based on the descriptive statistical method, it is revealed that merger has no significant impact on the audit fees as there was a little growth on the audit fees of regular customers. When the merging was finished, the amount of customers was decreased to some extent, the proportion of large customers was increased, and the entire customer structure was optimized.This paper is fully affirmed the positive effects of the third merger upsurge on improving the market share of local firms. However it is also found the fierce competitions of resources and prices among local firms at present which were contributed to the reasons that caused the insignificant impact on the audit fees’increase. Currently, our domestic accounting firms require much more spontaneous mergers and give priority to human resource integration during the process of merger so as to strengthen the results.