The Analysis Of Accounting Profession Expertise And Audit Fees

As China's market economy and capital market continue to develop and improve,the fierce competition in the audit market is also increasing.As far as the general commodity market is concerned,if the quality of the products provided by the manufacturer is the same and the cost for the consumer to change the product supplier is low,in this case,the manufacturer wants to avoid the loss of the original consumer and attract New consumers can only reduce prices.Similarly,in terms of the audit product market,if the quality of audit services provided by accounting firms is considered to be indiscriminate,while the cost of changing accounting firms by listed companies is low,Then accounting firms can only maintain their market share in the audit market by lowering prices or acquiring customers.The traditional competitive strategy of lowering prices to maintain a competitive advantage in the market has exposed more and more drawbacks as the audit market continues to improve.Excessive price competition among accounting firms will reduce their performance to a certain extent.Due to the independence of the three parties,the quality of the audit report cannot be guaranteed,which in turn affects the orderly development of the entire audit industry.According to the “deep pocket” theory,when investors suffer losses,they always tend to sue the accounting firm to obtain more compensation.Therefore,the accounting firm needs to compare the industry where the audited entity is located during the audit.A thorough understanding of the industry's status on the business objectives of the audited entity and its significant impact on the financial statements.Only in this way can the accounting firm connect the external environment faced by the audited entity with the business objectives,business strategy,operational risks,and major misstatement risks of the audited entity,so as to better carry out the audit work.The accounting firm's development of industry expertise can provide a more in-depth understanding of the industry in which the audited entity is located,can more quickly identify problems,and use their own industry expertise to make targeted recommendations.The ultimate goal of the accounting firm's development of industry expertise is to gain a higher market share and gain higher returns.This article mainly studies the relationship between accounting firm's industry expertise and audit fees,and empirically examines whether accounting firm development industry expertise can bring an audit fee premium to it.It is important theoretical and practical significance to test whether the development of industry expertise is an effective way for the development of accounting firms in China,both theoretically and empirically.This paper adopts a combination of theoretical analysis and empirical analysis,using A-share listed companies from 2008 to 2015 as research samples,establishing multiple regression equations,and exploring the relationship between accounting firm industry expertise and audit fees.The results of the study found that there is a positive correlation between the accounting firm's industry expertise and audit fees;and compared with the economically underdeveloped regions,the positive correlation between accounting firm industry expertise and audit fees in economically developed regions is even more significant.There are six parts in this paper.Except the introduction in the first part,the core content is the second to sixth parts.The second part is the literature review,which is mainly a review of domestic and international research on accounting firm industry expertise and audit fees.It is found that the development of industry expertise can inhibit financial restatements,and how accounting firm development industry expertise will generate audit charges The impact did not reach a unanimous conclusion,and there was little research on the combination of industry expertise,regional differences,and audit fees.The third part elaborates the theoretical basis for the relationship between the professional expertise of audit firms and the audit fees,describes the profession expertise of accounting firms and describes their measurement methods,and describes the constituent elements and influencing factors of audit fees.The four basic theories of competition theory,agency theory,information transmission theory,and deep pocket theory related to this article are clarified.The fourth part is the theoretical analysis and assumption of the accounting firm's industry expertise and audit fees.Through theoretical analysis,this paper puts forward two research hypotheses.One is the assumption that the accounting firm's industry expertise is positively related to audit fees,and the second is Under the same conditions,compared with economically underdeveloped regions,the positive correlation between the professional expertise of accounting firms in the economically developed regions and audit fees is even more significant.The fifth part is an empirical test to illustrate the study sample selection and data sources.It introduces the models used in variable design and empirical testing,analyzes descriptive statistics,correlation test results,performs multiple regression analysis,and makes robustness tests.The sixth part is the conclusion,summarizes the conclusions obtained from the empirical results of this paper and proposes corresponding countermeasures.