Annual Report Inquiry Letter、Social Trust And Audit Fees

In response to the call of the party and the national government to "innovate the supervision model and improve the level of refined management",and further strengthen the responsibility for the front-line supervision of my country’s capital securities trading market,my country’s Shanghai and Shenzhen stock exchanges began to implement the inquiry letter system in 2014.Gradually push forward the transition from previous presupervision to in-process and post-supervision.In recent years,the inquiry letter system is becoming more and more perfect,while the amount of inquiry functions and types of inquiry letters have gradually increased,the scope of inquiries to listed companies has also gradually expanded.Although the inquiry letter is a non-punitive supervision,it is mandatory to a certain extent.When sending the letter,the company’s reply time will be clearly specified,and most third-party institutions,including accounting firms,will be required to issue verification opinions.Therefore,When a company receives an annual report inquiry letter,especially when it receives the content of an annual report inquiry that requires the auditor to issue a verification opinion,will the auditor regard it as a signal of increased risk,which in turn will have an impact on audit fees? In view of the above considerations,this paper studies the relationship between the annual report inquiry letter and audit fees.At the same time,in the context of building an honest society,it is concerned that informal systems such as social trust are playing an increasingly important role in the capital market.To a certain extent,it can even make up for deficiencies such as the legal environment.Therefore,this paper introduces social trust as a moderator variable to explore the role of social trust in the relationship between the two.Through manual collection,A-share listed companies from 2015 to 2020 were selected as samples to study the impact of the annual report inquiry letter on audit fees.Classification,focusing on the impact of the annual report inquiry letter that requires the auditor to issue a verification opinion on the audit fee.Through empirical research,it is found that:(1)compared to unreceived companies,the audit fee for the next period of the listed company that has received the annual report inquiry letter in the current period will increase.(2)Among the companies that receive the annual report inquiry letter,the annual report inquiry letter that requires the auditor to issue a verification opinion has a positive impact on the listed company’s next audit fee.(3)Among the companies that received the annual report inquiry letter,a high level of social trust can slow down the positive impact of annual report inquiry letters that require auditors to express verification opinions on audit fees in the next period.By studying the governance effect of the annual report inquiry letter on the audit market,the relevant literature research has been enriched,and it is also helpful to further explore the regulatory effect of the annual report inquiry letter on the capital market.At the same time,it also alerts listed companies and auditors,reminding listed companies to pay attention to honest operation,strengthen internal governance,and consciously improve the quality of accounting information.Auditors should consciously abide by the provisions of accounting standards and auditing standards,implement appropriate auditing procedures,enhance their independence,perform their duties with due diligence,and maintain a good capital market environment.