An Empirical Study Of Integrated Audit Influence On Earning Quality

In recent years, companies in our country have exposure financial fraud which causes many of us to worry. It raises our doubt whether the financial report really reflects the quality with guarantee under such circumstances. The evaluation of internal control of enterprises becomes vitally important. This also speeds up the steps in establishing a legal system to evaluate all internal quality control.Our country has a late start in establishing an internal evaluation system. The concept of audit of internal controls and Integrated Audit have been discussed not too long ago. Related principle and regulations are being improved. In July 2002, the US congress and government passed the SOX Act to elevate the internal evaluation of enterprise to the legal standard. Later on, the US PCAOB in March 2004 and May 2007 announced the AS2 and AS5 to improve problem solving during difficult evaluation processes. AS5 regulates external evaluation personel to use vertical risk control to execute internal evaluation. It also introduces the concept of Integrated Audit which allows the same accounting office to execute the evaluation of both the financial report and the internal control of the financial report. Upon the foundation of SOX Act, in May 2008, the Financial Department and the Five Departments Join Committee announced the fundamental regulations of internal control of enterprise. In April 2010, it announced the guideline of internal control evaluation of enterprise with the concept of Integrated Audit. In view of this Integrated Audit is gaining concern and support of the related regulators. There are increased number of enterprise using Integrated Audit in practice. As a result, will Integrated Audit improve surprise quality?Through the review and analysis of literatures of our country and overseas, the studies of the academic circles in the effect of the Integrated Audit stay in format research stage. Only a few scholars study the effect of the unified evaluation through practical execution and obtained different conclusions. This article takes 2012 and 2013 listed companies as samples and separates the internel control evaluation into Integrated Audit and non- Integrated Audit. It also evaluates through Integrated Audit and financial report; through non- Integrated Audit and financial report. Through the comparison of Integrated Audit and non- Integrated Audit to study the influence of Integrated Audit to the surplus quality. Under such study it is discovered that 1)enterprises using Integrated Audit have higher earning quality then those only using evaluation through financial report. 2)enterprises using non- Integrated Audit do not have distinct improvement in earning quality. 3)Enterprises using Integrated Audit have better earning quality then those using non- Integrated Audit. In accordance of the result of this study, the supervising authority should urge and oversee all enterprise to use Integrated Audit and continue to improve the internal control system to carry out ernestly all policies and suggestions in Integrated Audit execution.