The Book-tax Differences,Internal Control Quality And Audit Fees

With the transformation of the economic system,China's accounting system and the enterprise income tax law adopt a moderate separation model.Book-Tax Differences is the difference between the total amount of the accounting profit and the taxable income.It is an important part of the tax return form and the scope of the auditor's focus.In recent years,China's "Ya Baxter" and "Kang pharmaceutical" events show that now more and more enterprises to manage earnings management behavior to manipulate profits.Existing literature research shows that high quality internal control can not only significantly reduce the possibility of significant misreporting,but also effectively curb earnings management.Will the different internal control quality lead to the heterogeneity between the Book-Tax Differences and the audit fees? This foreign property-based enterprise can obtain more policy resources,reduce market restrictions and reduce the cost of financing because of the relationship with the government.High quality internal control and the nature of state-owned property often mean that enterprises have higher governance level.Can they alleviate the positive correlation between the Book-Tax Differences and audit fees to a certain extent? If high quality internal control coexists with the nature of state-owned property rights,is the relationship between the Book-Tax Differences and audit fees relationship an alternative or complementary relationship between the two? This paper examines the sample to 2010-2016 years of China's Shanghai and Shenzhen A-share listed companies as A,the study of the relationship between Book-Tax Differences and audit fees,in addition to join the factors of internal control quality,whether there is heterogeneity in different conditions and the quality of internal control of Book-Tax Differences between charges.The empirical results show that the Book-Tax Differences is positively related to audit fees,which is because the Book-Tax Differences affects the CPA's judgment of audit risk.Auditors will reduce audit risk by increasing audit procedures,so as to raise audit fees.Further studies showed that the quality of internal control and the relationship between Book-Tax Differences and audit fees heterogeneity,the enterprise internal control of high quality,the relationship between enterprise Book-Tax Differences and audit fees are not significantly correlated,while the lower quality of the internal control of enterprise Book-Tax Differences and audit fees are significantly positive correlation.Further research found that the remission effect is found only in the non-state-owned enterprises,state-owned property rights will help ease the positive relationship between Book-Tax Differences and audit fees,which indicates that the nature of state-owned property rights and the high quality of internal control has a certain degree of substitution effect in Book-Tax Differences and relationship between audit fees.The main innovations of this paper are the following three points: first,the relationship with the quality of internal control as a research perspective to examine the accounting tax differences and audit fees,the empirical test of the internal quality and accounting tax differences and the relationship between audit fees;second,there is heterogeneity will be incorporated into the analysis framework of property rights,examine it influence on the relationship between the Book-Tax Differences and audit fees;third,this paper will influence the quality of internal control and property rights combined with the empirical test of accounting tax differences and audit fees,the results show that the property and quality of internal control has a certain degree of substitution effect on Book-Tax Differences and relationship between the audit fees.