Research On The Impact Of Audit Service Price Decontrol To The Audit Quality Of Accounting Firms

In recent years,the audit failures occur frequently,the quality of the accounting firms and the audit quality has been questioned.Because of China's audit market concentration is low,the audit demand is mainly driven by the mandatory government demand,lack of spontaneity of market demand,there is the price competition,the audit pricing is not only affected by the government supervision departments,has also been a public concern.December 2014 national development and Reform Commission issued a <notice on the release of some of the service price advice>,clearly pointed out that the audit service price decontrolled.Under this background,this paper studies the impact of audit service price decontrol;on audit quality of accounting firms by taking the audit service price as the breakthrough point.The paper takes the empirical analysis as the main research method.Based on literature review and the theoretical basis of the discussion on the influence of audit fees,audit quality and audit service price decontrol impact on audit quality are analyzed,and the analysis of the different scale firms,the audit service price decontrol and the influence on the quality of audit.In this paper,we use the relevant data of A-share listed companies in China from 2014 to 2015 in two years as the research sample,calculate the discretionary accruals by selecting the modified Jones model,as a measure of audit quality,using STATA and EVIEWS tools,research on the impact of audit service price decontrol to the audit quality of accounting firms by empirical study.The empirical results show that:(1)Audit fee and audit quality are positively correlated;(2)the audit service price decontrol will make audit quality decline;(3)Audit services price decontrol will not have the significant impact on the audit quality of large accounting firms,while the medium and small accounting firms will have a significant impact.The original intention of the audit service price decontrol is to constrain and enhance audit quality by market forces,give full play to the subjective initiative of the market and provide more information of high quality for the social security.But in China's current audit market environment,the implementation of the policy will affect the audit fees and audit quality of accounting firms which the relevant government departments must pay attention to.The research of this paper can provide some theoretical basis and guidance for the formulation of the policy and implementation of follow-up regulatory measures.