The Empirical Study Of Integrated Auditing And Earning Quality

In the early 21 st century,Enron,WorldCom,Tyco International and other large companies had many financial scandals what were exposed in the public.In July 2002,with the purpose of standardizing the order of capital market and rebuilding the confidence of investors,the Congress enacted the “Sarbanes-Oxley Act”,forcing companies to disclose the internal control audit reports.In order to guarantee the implementation of “Sarbanes-Oxley Act”,the US Public Company Accounting Oversight Board issued the Auditing Standard No.2,to guide the implementation of the internal control audit.But the executory cost of this issue is too high,ignoring the defects of audit efficiency.To reduce the negative effects of AS No.2,the Public Company Accounting Oversight Board issued the Auditing Standard No.5 in July 2007.It is the first time that put forward the concept of integrated auditing.So the audit pattern of integrated auditing began to spread in the global scope.The internal control auditing became an important measure to ensure the quality of financial statements,not only in the theory but also in practice.Compared with China,the construction of internal control standard system started relatively late.In May 2008,the Ministry of Finance jointly with other four ministries issued the “Internal Control Basic Norms”,which was known as C-Sox,requiring the listed company should hire the eligible accounting firms to audit the effectiveness of internal control.The Ministry of Finance jointly with other four ministries issued the “Guidelines of Internal Control Basic Norms” in April 2010.The standard proposed the listed company in our stock market should enforce the internal control audit,and the listed company can choose whether to execute the integrated auditing or not.This is the first time that our country mentioned the concept of integrated auditing at the system level.Integrated auditing began to apply in the actual operation.In August 2012,after full consideration of the differences of stock market,the ministry of finance decided that the regulation was first started in the main board listed companies in our country since 2012.Within three years,to 2014 all the main board listed company should implement internal control auditing,and disclose the relevant audit reports.According to the foreign literature,Chinese Institute of Certified Public Accountants solved the internal control auditing problems in the practice on the premise of integrated auditing,and talked about how to integrate organically of the integrated audit and the financial statements audit,promoting the integrated audit in the lay of application and development in our country.With development and improvement of the integrated audit and the support and promotion by Ministry of Finance and CICPA,the audit mode named integrated auditing gradually had been adopted by the listed company.And it let us wonder,could integrated auditing improve the quality of enterprise surplus since more and more listed companies choose to use integrated auditing?By reading the related theories and literature can be found that the research of integrated auditing mostly focused on normative research at home and abroad: most foreign literature pay more attention to the implementation of the two new auditing standards and the influence to the listed company.The influences of two standards are such as integrated auditing on the audit efficiency and audit fees;and the research of integrated auditing in domestic is focused on the necessity and feasibility of implementing and shaping of the integrated auditing process,which is lack of empirical research.Only a few scholars use empirical method to study the influence of integrated auditing on audit fees,audit quality at present,lacking of empirical research on integrated auditing and accounting surplus.Therefore,this article selected from the empirical data of listed companies of Shanghai and Shenzhen main board stock market,combined with the theoretical basis and predecessors' research,put forward three hypothesis of the research and design the model for the empirical analysis,finally the study comes to the conclusion and come up with the policy suggestions.Through the study we can make the conclusions:(1)Compared to the inexecution of integrated auditing,integrated auditing can significantly improve the quality of accounting earnings;(2)Compared to non-state-owned listed companies,state-owned listed companies are more willing to implement integrated auditing;(3)Compared to the lower earnings quality of listed companies,higher earnings quality of listed companies are more willing to implement integrated auditing.Then according to the conclusions of this empirical research of integrated auditing,author puts forward the relevant policy recommendations,elaborating from three dimensions: firstly,from the angle of listed companies,due to the integrated auditing can improve the quality of accounting earning,so the listed company should choose integrated audit in order to improve earning quality,and the listed companies with higher earning quality are more willing to implement integrated auditing,the listed companies can shape good enterprise images by implementing integrated auditing;Secondly from the perspective of accounting firms,due to integrated auditing can improve the quality of surplus,so the external auditors should persuade the listed companies to implement internal control audit.Also,through this method,accountants can improve the quality of accounting earnings,reduce the audit risk,improve audit quality;The last suggestion is from the perspective of regulators,considering the influence of the integrated auditing with earnings quality,regulators should ensure the time of implement the integrated auditing method for listed companies entirely as soon as possible,to guide the process and key points of integrated audit,to promote the implementation of integrated auditing into applications in a wider range.