The Organization Change Of Accounting Firms And Economic Consequences Study

Since the system of registered accountant was restored in 1980,the development of China's CPA industry has gone through three stages: normative development,institutional innovation and international convergence.In the meantime,the organizational form of accounting firms has also gone through continuous development and evolution,from the initial affiliated government agencies or institutions to 1998,"decoupling restructuring",the general partnership and limited liability coexist,and then in 2010 the Financial Ministry issued a document calling for a comprehensive promotion of special general partnership.With the improvement of the laws and regulations,the scope of the reforming firm has been expanded from the domestic accounting firms to the Chinese-foreign cooperation ones.Under the guidance of the government,this will help break through the bottleneck of domestic large and medium-sized firms' goal of being bigger and stronger,while promoting the convergence of the organization of domestic firms and international offices.By the end of 2013,China's top twenty accounting firms(including the Big Four)have completed the relevant restructuring work.Changes in the organization will lead to different legal risks.Taking into account that the restructuring is driven by the government,will the firm's own governance change under a different legal environment? Will its external audit services like auditing fees and quality be improved? Based on this,this paper aims to study the economic consequences of the transformation of accounting firms into special general partnership.According to the relevant data,both domestic and foreign accounting firms completed the restructuring in 2011 and 2012.So the previous research mostly focused on 2013 or so.The restructuring time is too short and the effect of the transformation may lag,so deviations are likely to exist.Nowadays,the first batch of transforming accounting firms have completed the restructuring for five years,the real effects have stabilized.Back to re-examining the consequences of the transformation policy in such a longer period of time would provide a more reliable and authentic evaluation.Based on the normative analysis and the case of Lixin Accounting Firm(BDO),this paper analyzes the economic consequences of transformation from two aspects,internal governance and external performance.The internal control level includes quality control,risk assessment,branch control and personnel management,in which the quality control is measured by the number of reports each certified public accountants issued and the risk assessment is measured by the quality of new customers.On the external performance level are audit quality,audit fees,customer choice and audit independence.Due to the different standards of audit quality,this paper adopts the widely used types of auditing opinions to evaluate audit quality.Through the analysis of a typical case,we wish to find the particularity and universality of the reform,so as to provide reliable experience support for the bigger and stronger of our firm.Research has shown that transforming into a special general partnership makes BDO put more emphasis on improving the internal governance mechanism in order to provide better audit services.Meanwhile,increased legal risks brought about the increase of audit fees,which indicates that transformation can help regulate the independent audit market,reduce vicious price competition.However,transformation can also have some negative impact.Although the audit independence was strengthened in a short period of time,after restructuring,Lixin's choice of customers became more cautious to control the audit risk from the source,which affect its audit independence and audit quality at last.In short,although the government-driven transformation was not a complete market behavior,but it objectively produced a lot of market-oriented consequences.The implementation of the special general partnership improves the structure of the independent auditing market in our country and helps to standardize the audit behavior.Therefore,the positive economic consequences of the transformation on the whole have confirmed the feasibility of the transformation policy and the contribution to our country's accounting firms' goal of being bigger and stronger.