Research On The Relationship Of Disclosure And Correction Of Internal Control Weakness And Audit Fees In Listed Companies

As the social and economic development to a certain extent, the demand for the audit comes to being. How to make price of the audit service should be the external manifestations of its inherent characteristics, so that we can be able to discover the shortcomings of audit service and strengthen the quality of audit reports, and thus promote the gradual improvement of the market. The profession of audit services leads to the complexity of the audit pricing. The price of audit not only measures the interest relationship among stakeholders, but also improves the independence of the external auditor and audit quality. In terms of the strong appeal of the audit pricing, it has become the research focus in academia to adopt what kind of the standards of audit pricing and quote factors that can affect the results of academic research.Since the SOX Act introduced in 2002 produced results, the other countries in the world following the foot-steps have enacted laws and regulations applicable to their own country, and China is no exception. Since 2006, our country has released many guidelines about internal controls. These regulations require listed companies to evaluate themselves about internal control construction and issue self-assessment report, also ask the auditors to release a verification report according to actual circumstances. This shows that our enterprise internal control standard system has been initially built, also implies that the focus of the external audit has been expanded. The auditors not only need to review the accuracy of the financial statements, but also need to strengthen the internal control review. In view of this, the audit firm and a corporate must take into account the issue of internal control deficiencies when they compromise the audit fees.The research approach of this paper is to use a combination of normative research and empirical analysis. The research idea is to make the normative research firstly, for discussing the relationship between the variable of the theme and audit fees in theory; and then to conduct an empirical analysis regulate research, for analyzing the correlation between the two.In particular, on normative research, the first part is to introduce the research background, purpose and significance and summarize the relevant references on deficiencies in internal control, influencing factors of audit fees and correlation between deficiencies in internal control and audit fees; then begins the theoretical analysis that shows the intrinsic link between the two and puts forward hypotheses at the same time. On empirical research, the paper selects Shenzhen A-share listed companies in 2012--2014 as samples. At first, the paper releases internal control deficiencies through consulting the self-evaluation of internal control published by listed companies, after brings the sample data filtered into the defined variables and models, and finally through a series of analysis including descriptive statistics, correlation analysis and multiple regression analysis to gain results.Results of the paper show that: audit fees will be increased if the corporate disclosure deficiencies in internal control, and will lead to more audit fees in subsequent years(within 2 years); the corporate will pay higher audit fees if it disclosures significant defects compared to the general defects; audit fees will decline if internal control deficiencies are corrected. According to research findings, the listed companies should improve the internal control and try to avoid producing internal control deficiencies. Once these appear, the companies should correct deficiencies actively in time and improve the quality of internal control. The conclusions of this paper also open up new ideas about audit pricing. It makes it easy to work out a reasonable audit pricing standard, improve the audit market and optimize audit services.