Huge Civil Liability And Audit Quality

Since 1980 s,the Chinese certified public accountant system has experienced 30 years of vicissitudes and has gained corresponding development.As an important guarantee of market economy,legal liability plays an increasingly prominent role in capital market.As the "economic police" of the capital market,CPA’s behavior is also constrained by legal responsibility.Previous studies on factors affecting audit quality mainly focus on the field of administrative supervision,mainly studying the relationship between administrative punishment and audit quality.There are few studies on the relationship between civil liability and audit quality,and few empirical studies on specific cases.Based on information theory,insurance theory and audit expectation gap theory,this paper studies the relationship between civil liability and audit quality by combining case study and empirical study.In the aspect of case analysis,the typical case of Wuyang bond fraud issuance is selected: Wuyang Construction defrauded the corporate bond issuance qualification due to improper use and management of raised funds and falsified part of financial information.As an intermediary that provided auditing services for the issuance of corporate bonds by Wuyang Construction,the court ruled that Daishin should bear a huge amount of joint liability.Secondly,it analyzes the case,describes and analyzes the changes of audit fees,client selection,proportion of non-standard opinions,CPA signature and audit duration before and after the court judgment,and preliminatively determines whether the audit quality has changed.Then,taking Daxin Accounting Firm as the main body,this paper compares the audit quality before and after the court judgment by measuring the earnings management level,and tests the influence of huge civil compensation liability on the audit quality of Daxin Accounting Firm.It is found that the judgment of huge amount of civil liability can improve the audit quality of Daxin firm,but the change of signature accountant can not significantly improve the audit quality.Finally,it is suggested that the judicial department should play the role of appraisal effectively to protect the legitimate rights and interests of investors,cultivate the legal consciousness of the majority of investors,and reasonably investigate the civil compensation liability of accounting firms.CPA is in urgent need of maintaining independence,accounting firms should actively build audit quality control system,and work together for a good audit practice environment.