Analysis Of Factors Affecting Audit Quality Of Small And Medium Accounting Firms

Audit quality is the essence of audit profession,affecting not only public interest and steady development of social economy,but also the survival and development of CPA in auditing industry.Based on empirical research in small and medium sized accounting firms in Inner Mongolia autonomous region,this paper illustrates factors affecting audit quality and proposes measures to improve it subsequently.The auditing quality can not be evaluated by single standard,as it can be impacted by many factors,especially how accounting firms and CPAs view the auditing risks.Such opinion is based on the inherent defects of CPA employment system and the challenge to their independence.The evolution of CPA shows that this profession is the outcome of social and economy development and is playing more and more important role.However,the analysis on the status quo of China CPA industry and CPA industry in Inner Mongolia autonomous region as well as my personal experience in reviewing the auditing quality of CPAs in Inner Mongolia autonomous region indicate that there are prevailing audit quality problems such as issuing improper audit opinions,failure to implement risk-oriented audit procedure according to the principle,or failure to implement necessary and important procedures on key projects etc.in small and medium sized accounting firms.From the perspective of CPAs' practicing environment,accounting firms,and accountants,this paper discusses reasons for low quality audit,including defects of accountant employment and organization system in accounting firms,lack of request for high quality audit,unreasonable audit charge,incompliance with professional ethics and insufficient competence of CPAs,etc.Measures such as eradicating financial fraud,optimizing external practicing environment of audit,reform employment system for CPAs,promoting special general partnerships,improving internal audit quality control within the accounting firms,strengthening the comprehensive competence of CPAs are suggested to be applied to improve audit quality.At this crucial moment when China is committed to supporting the development of SMEs,small and medium sized accounting firms are endowed with this valuable opportunity.CPAs in China should take their duly responsibility and devote themselves in the development of auditing industry.