The Research On The Effect Of Merger Of Accounting Firms On Auditing Quality

With the pace of country's reform and opening up,accounting firms were set up by financial departments in China in the early 1980 s.Over the past more than 30 years,China's accounting firms have experienced many merges in the course of development.In 2000,The Ministry of Finance has put forward higher requirements for the business qualification of accounting firm's securities and futures and financial audit.The CICPI in 2007 issued “the opinion on the promotion of accounting firms bigger and stronger”,then published “Guide to internal governance of accounting firms” in June 2008.July 2009 General Office of the State Council forwarded the Ministry of Finance “on speeding up the development of China's CPA industry”.The Ministry of Finance and the CSRC jointly issued” a pilot scheme for accounting firms engaging in the H-share enterprise audit business” in November 2009.The CICPI notes“the publication of a number of policy measures to support the further strengthening of accounting firms”on June 8th,2012 which encourages accounting firms to expand the size of local firms and manage homogeneously after merger.The merger of accounting firms can indeed allow them to expand rapidly,but it remains to be seen whether the audit ability of the merged firm is really enhanced.This paper mainly studies whether the merger of accounting firms is to improve the audit quality,whether the actual realization of the essential goal of being strong.In 2009,Zhejiang Tianjian was merged with two CPA firms from Zhejiang Tianjian Dongfang and HunanKaiyuan Xinde.This article takes Zhejiang Tianjian Accounting firms as the research object.We select the relevant data for two years before and after the merger of the firm from the database of CSMAR and the CICPI.In this paper,independence test,descriptive analysis,correlation analysis and multivariate regression analysis are done for the selected data.The following things are discussed about the audited units before and after the merger of Zhejiang Tianjian accounting firm: the audit term,the natural logarithm of total assets at the end of the year,the company's year-end accounts receivable accounted for the proportion of total assets,the company's growth capacity,the ratio of assets and liabilities,the number of listed companies,asset returns and other indicators of changes in descriptive analysis and correlation analysis.Through descriptive analysis andcorrelation analysis we can examine the changes of audit quality after merger.And the Jones model is used to measure the audit quality by earning management degree.It is concluded by multivariate regression analysis of the non-standard audit opinion ratio,audit fee and discretionary accruals: The quality of audit has fallen to some extent after merging.The merger of accounting firms could expand the size of the firm,but the surface of the merger can not improve the quality of the audit.Even after the merger it can not be bigger and stronger.Merging firms should focus on resource integration between the two sides and establish a improved overall internal control system.Merging from all aspects can achieve substantial merger and complement from each other.