Study On The Influence Of Practice Quality Inspection On Audit Quality And Its Path

With the rapid development of China’s economy,in order to actively curb the frequent occurrence of financial fraud and other malignant events in the capital market,the China Institute of Certified Public Accountants actively implements and continuously improves the self-discipline supervision of the CPA industry.In 2011,CICPA further revised inspection system in order to help supervise the practice process of the firm through real-time dialogue to effectively improve the audit quality,so that the inspection becomes a normalized selfregulatory means of the industry.So can this measure achieve the regulatory purpose and improve the audit quality of the firm? What is the impact path? Through what mechanism? Is this effect constrained by the size of the firm and the nature of property rights? The conclusions of the existing research on the impact of the practice quality inspection on the audit quality and its mechanism are still not mature.Therefore,this paper focuses on the industry self-regulation,discusses its regulatory effectiveness and path on audit quality,and considers the heterogeneity of the size of the firm and the nature of property rights,and puts forward effective suggestions for the supervision of the CPA.This paper selects 2011-2019 as the sample data period to probe into the impact of inspection of CICPA.The fixed effect model is adopted in the analysis process,and the audit cost is taken as the substitute variable of audit quality.The conclusion shows that the audit cost of accounting firms has significantly increased after inspection,that is,the audit quality has been improved.More Than This,After inspection,based on the principle of resource allocation optimization,the firm will conduct internal management and improve the probability of internal auditor replacement.At the same time,the mechanism results show that inspection will affect the audit quality through the upgrading and replacement of internal auditors.This is reflected in the fact that after firm is inspected,in order to actively respond to the inspection requirements of CICPA for high-quality audit,it will enter the internal control and risk management process,re-allocate auditor resources and assign more experienced auditors to enterprises to improve the audit quality,which is the output of this process.Further research found that in large-scale firms and when the property rights of enterprises are non-stated-owned,the inspection is more likely to improve the audit quality through upgrading internal auditors.The conclusion of this paper further enriches the research on the economic consequences of the CICPA’s inspection of audit quality,expands the literature on the regulatory effects and mechanisms of industry self-regulation and preventive regulation.It has guiding significance for the effective improvement of audit quality of China’s accounting firms,the formulation of the CICPA’s regulatory policy,and the improvement of the industry’s self-regulation regulatory system.