The Impact Of Insufficient Investment On Audit Fees And Audit Opinions

Investment as a means of resource allocation for enterprises,underinvestment and overinvestment will reduce the value of the company.Since 2006,China has established a risk-based audit model.The auditor needs to take more responsibility for the audit opinion issued by the auditor and requires the auditor to comprehensively analyze and evaluate various factors that affect the economic activities of the audited entity.Underinvestment requires approval in the audit report and affects the evaluation of the company's corporate value.Therefore,it is of great theoretical and practical value to study the relationship between the company's lack of investment and audit costs and audit opinions.This article uses a combination of literature analysis method and empirical analysis method.Taking China's A-share listed company as a research sample,it studies the impact of underinvestment and its value and its audit fees and audit opinions.It also studies the free cash flow of the company and insufficient investment.The perspective of the category has deepened this study.The main work of the paper:1)Analyze and scrutinize the research status of domestic and foreign audit fees and factors that influence the type of audit opinion;2)Analyze the status quo of China's listed companies' investment efficiency,starting from the mechanism of the audit fee's supply and demand sides' impact on the impact of underinvestment on audit costs and the role of risk-oriented auditing on the role of underinvestment in audit opinion types.Put forward the research hypothesis of this article;3)Based on the 2012-2016 A-share listed company as the initial sample of the study,it analyzes the influence of the listed company's current year's insufficient investment and amount on the audit fees and audit opinions.The study found that: when there is insufficient investment in listed companies,auditors will be charged a higher audit fee;in the case of listed companies with insufficient investment,the larger the amount of underinvestment,the higher the audit fees paid,and the non-standard audit opinions issued.The greater the probability.In-depth research and analysis found that the impact of underinvestment on audit costs and audit opinions was only significant in the low free cash flow group;the impact of underinvestment on audit costs was only significant in non-state-owned enterprises,and the impact of underinvestment on audit opinion was only Significant in state-owned enterprises.Finally,it puts forward policy recommendations from four perspectives: listed companies,accounting firms,and government regulatory agencies and investors.The possible contributions of this article are:1)Provide incremental empirical evidence for the study of the economic consequences of underinvestment in listed companies;2)Using the domestic sample for the first time to study the impact of underinvestment on the types of audit opinions,and deepen the research based on the perspective of the company's free cash flow and underinvestment classification,and to expose the underlying causes of the lack of investment impact on audit costs and audit opinions.Enriched the theoretical research results in the field of audit fees and audit opinions;3)Encourage the listed companies and government supervision departments to strengthen the management of the company's under-investment to enhance the investment efficiency of the company and the entire market.It provides theoretical support for investors to evaluate the value of the company and the audit firm to improve the audit quality.