Supervision Effect Of The Securities Regulatory Commission On Accounting Firms

As an important intermediary service institution in the capital market,accounting firms bear the important responsibility of safeguarding the quality of information disclosure.Accounting firms are the backbone of maintaining a stable economic environment.China's audit market started late.After experiencing the development stage of restructuring and merger,the scale of local accounting firms has grown.However,a series of audit failure cases occurred because accounting firms neglected the quality of service.In recent years,the CSRC has issued frequent fines.A number of accounting firms have been suspended from securities business licenses for “two years and two orders”.As the largest local institution,Lixin Certified Public Accountants has been subject to administrative penalties by the CSRC for three consecutive years.However,the business volume of Lixin has continued to grow.This caught the author's attention.Why can Lixin continue to develop after being punished? Has the administrative punishment of the CSRC played its due role in supervision?Most scholars have used empirical methods to study the impact of administrative penalties on accounting firms.Previous articles built model analysis from a single perspective of market share,audit quality or audit fees.Few scholars choose a typical case for in-depth research.Due to the different models built by scholars and the different selected samples,there are differences on many issues.Some issues have not yet reached a unified conclusion.This paper breaks through the research ideas of the existing literature and adopts a single case research method.This paper takes Lixin Certified Public Accountants as a typical representative to deeply explore the supervision effect of the CSRC's administrative punishment on accounting firms from various angles.Based on the status quo of China's audit market development,this paper explores the economic impact of administrative punishment on accounting firms,in order to provide reasonable suggestions for government supervision and internal governance of accounting firms.The paper found that the audit quality of Lixin has improved after being punished by the CSRC.The number of customers and audit revenue of Lixin have improved with the improvement of the overall market environment.Therefore,administrative punishment has played a regulatory role in improving the auditing quality of accounting firms.However,since China's reputation mechanism has not been fully established,the disciplinary effect of market customers on penalized accounting firms is not obvious.Specifically,the external impact of administrative penalties on the accounting firms is reflected in changes in market share.After Lixin was punished,its customer liquidity increased significantly and the number of new customers increased.The internal impact of administrative penalties on the accounting firms is reflected in changes in audit quality.After Lixin was punished,its management awareness of audit risk was significantly strengthened.Lixin took measures to strengthen customer quality control to avoid risks,which in turn led to an increase in audit quality.which in turn led to an increase in audit quality.The increase in market share and audit quality guarantees the high growth of Lixin 's audit fees.Therefore,administrative penalties have not had a negative impact on the audit fees of Lixin.Through in-depth analysis of the penalties and economic consequences of Lixin,this paper attempts to propose the enlightenment and suggestions to promote the good development of local firms in China.From the perspective of the government,the supervision of the CSRC shows the characteristics of insufficient punishment and serious lag.The administrative punishment has not played its due disciplinary effect.Therefore,the government departments should improve the supervision efficiency of accounting firms and increase penalties.From the perspective of the accounting firms,the CSRC's administrative penalties will convey to the market signals that the accounting firm's audit quality is inferior,causing it to suffer reputational losses.Therefore,accounting firms can improve audit quality and strengthen reputation building by improving risk management awareness and strengthening business quality control.