Research On Public Pressure,Internal Control And Audit Quality

Audit quality is the cornerstone of auditing and assurance services,which is related to effective corporate governance and stable market operation.However,audit quality is a worldwide problem.From PwC to REANDA and RuiHua,audit quality problems occur frequently and the situation become increasingly serious.It has aroused the concern of government,media and the public,and the audit quality-improvement has become an important topic of "serving national construction and honesty construction" in new period.Unfortunately,most of the existing studies focus on investigation of internal influencing factors such as auditor characteristics,and rarely discuss the governance effect of public pressure from external perspective.This paper through the theoretical integration of audit requirement,reputation mechanism,behavior audit and agenda setting,using the sample of A-share listed companies from 2009 to 2017,combining normative analysis with empirical analysis,to reveal the path and mechanism of public pressure affecting audit quality.The innovative work mainly includes:(1)Reveals the internal mechanism of public pressure affecting internal control and audit quality.It deconstructs the public pressure from two dimensions of legal environmental pressure and media environmental pressure.Then deduces the realization path of punishment deterrence and information stimulation on the behavior constraint of auditors and auditees.This paper constructs the mediated moderation model of public pressure,internal control and audit quality,and conduct the chain research which expands the theoretical perspective of audit quality impact research.(2)Examines the governance effect of public pressure and the mediating effect of internal control.The empirical results show that public pressure not only directly affects auditors' judgment,but also indirectly affects audit quality by standardizing auditees' internal control.Furthermore,the legal environmental pressure plays a leading role,and the constraint effect to audit quality is strongerthan media environmental pressure.The mediating effect is more prominent in large audit firms or state-owned companies,which have stronger risk-prevention capacity and information sensitivity.The conclusion provides empirical evidence for the improvement of audit quality from the perspective of public pressure.(3)Investigates the moderate function of media environmental pressure on legal environmental pressure.Through the deep deconstruction of public pressure,the mediated moderation mode is constructed.It is found that the governance effect of legal environmental pressure on internal control and audit quality is "effective" in low-pressure media environment,and "ineffective" in high-pressure media environment.It shows that the information explosion and media dishonesty caused by excessive development of media environment hinder the decision-making efficiency of regulatory departments and audit subjects,weaken the deterrent effect of legal punishment.This discovery provides empirical support for the structure optimization of public pressure and the improvement of audit quality.(4)Puts forward the governance framework of audit quality based on theoretical analysis and empirical research.Firstly,the government should improve the construction of legal environment,optimize the development of media environment to strengthen the behavior restraint of pressure on companies and auditors.Secondly,the government should promote the standardized governance of companies' internal control and improve the rectification of audit problems on the basis of consolidating legislation,enlarging law enforcement and deepening supervision.Finally,with the construction of data platform as the guarantee,administrative database and reporting platform are established to deepen audit market and social supervision.