Study On The Impact Of Financial Restatement On Audit Quality

In recent years,the restatement of financial reports has become increasingly fierce,which has not only damaged the trust of many investors in the enterprise management,but also caused market participants to suspect the audit industry.As China's rule of law is increasingly completed,and international convergence of accounting standards and audit standards is common,investors can blame the accounting firms and auditors for the losses caused by accounting fraud.Certified public accountants have a sense of crisis and perform their duties in the next audit work to avoid much serious consequences.This provides a new idea to study the impact of financial restatement on audit quality:Compared with auditors who don't have a financial restatement experience,what changes in the audit quality of auditors who have experienced financial restatements before and after the financial restatement occurred?This article adopts normative analysis and empirical analysis at the same time in order to study this issue.The signing certified public accountants of A-share companies in the year of 2007-2014 will be used as the object of our study.The financial restatement of the company's audited annual report will be used as a symbol of audit failure.The signing certified public accountant who has failed the audit is defined as a restated auditor.The signing certified public accountant who has never failed the audit is defined as a clean auditor.The sample of the company audited by the clean auditor is used as a controlling group.The following questions have been examined:(1)Is there a impact effect on restated auditors because of the financial restatement which translates low-quality audit into high-quality audit(2)Under the different identity of auditors,whether there is a difference in the affected strength of accepting warning of the restated auditors.By analyzing the changes of audit quality before and after financial restatement,the following conclusions are drawn:(1)It is obvious that the quality of restated auditors before the financial restatement is lower than the quality of the clean auditors.The low-quality audit of restated auditors is not only existing in the year of the financial restatement,but also occurs all the time.The quality of the audit is affected by the personal characteristics of the auditor;(2)It is obvious that the quality of restated auditors after the financial restatement is better than the quality of the clean auditors,which shows that the restatement of the financial reports can serve as a warning to the auditors and encourage the auditors to improve the audit quality in the following work;(3)Compared with the engagement partners,the correlation between review partners and audit quality is more significant,which shows that the financial restatement has a stronger impact on the audit quality of review partners.