A Sem-based Study On The Audit Quality Evaluation

The audit quality of CPA firms has been a top topic among the vast number of investors, government agencies, auditors and listed companies. In this case, the demand for audit services and audit quality is growing. There have been many financial fraud cases at home and abroad, such as Enron, Xerox, WorldCom and Lam shares, Yinguangxia, Wanfu Biotechnology, Green-land, these fraud cases without exception and audit quality related. Research on audit quality evaluation has great significance for investors, and other departments to understand the status of audit quality, and also has profound theoretical and practical significance to improve audit quality. On this background, this article is focused around essential characteristics of audit quality, and applies a new approach, namely Structural Equation Modeling(SEM) evaluation method to conduct confirmatory factor analysis, evaluating audit quality of listed companies in China rationally and scientifically.According to the classical definition about audit quality, audit professionalism and independence are used as basic latent variables for audit quality evaluation model to establish a theoretical assumption of audit quality higher order factor assessment model. Based on the information of 40 Chinese CPA firms from 2013 to 2014 and the use of SEM, we select the 14 observed variables, 2 latent variables to make empirical analysis for audited quality model. In order to make the goodness fit and evaluation results more reasonable, then the audit quality model is suitably amended, finally draw a correction model with goodness fit inherent and good quality inspection.After then, this evaluation system has been applied to two firms test, and according the evaluation results we analyze professional and technical level, size, reputation, market competition, customer dependence of the two firms in a targeted manner. The results show that the evaluation system can not only provide a more accurate evaluation of audit quality, but also to provide more substantial decision support for investors, creditors and government.The topics enrich the theory research ideas of audit quality evaluation. Based on the results of theoretical and empirical analysis, applying SEM to empirical research of audit quality provides a new analysis for firms audit quality, which has provided a broad space for further research model, and has far-reaching significance.