Effect Of The Reform Of Auditing Firms On Auditing Quality

In July 2010, the Ministry of Finance and the State Administration for Industry and Commerce jointly released the temporary provision "about promoting large and medium-sized public accounting firms to be special ordinary partnership organization forms" the central idea of which was to promote the form of domestic accounting firms in China at that time from the form as limited liability company into the form as special general partnership. What is more, for large accounting firms, the transform was necessary and for other firms, the transform was encouraged. The provision was proposed in order to continuously improving the quality of audit service of accounting firms in our country, and playing the role of independent certify in the capital market.Under the guidance of policy, domestic large and medium-sized firms have completed the tranform from company to partnership. So, in reality, whether the provision of tranform has effectively improved the quality of auditing, that is the issue this paper concentrated on.Because of the organization form of certain accounting firm directly determines the legal responsibility the partners face, the paper at first reviewed relevant domestic and foreign literature on audit quality and the organizational form of the firms and the audit quality and legal liability. On this basis, train of thought and research methods of this paper was generated. Then, comparison and analysis of the characteristics of various forms of organization of the firm were made and the transform process of accounting firm was stated. To be more specific, connected with the transformation policy, comparison of auditing quality between organisation form of company and partnership was made and expounded the theoretical basis in this paper. Then, on the basis of the realistic background and theory, the hypothesis was put forward and the model was established, after which the data were collected in order to carry on the empirical test. Finally, according to the empirical test results, conclusion was presented that the transformation of accounting firms has improved the quality of audit, and the effect of this kind of improvement was increasing by time.The empirical testing of this paper verified the effects of transform of accounting firms on audit quality, as the result the paper itself can not only enrich the relevant literature, but also can evaluate the result of the tranform provision.