CPA Audit Independence Factors and Countermeasures

Abstract: The essential feature of the independence of the audit, but also the requirements of conduct for auditors, the audit professional to win the trust necessary for the public. CPA industry started relatively late in China, and its auditor independence, there are still many problems. This paper points out the influence CPA Audit Independence factor, and its analysis, proposed to enhance the independence of the CPA audit suggestions.

Keywords: CPA; independence.

First, the factors that affect the CPA Audit Independence

1, the non-audit services. Non-audit services relative to audit services, is an accounting firm to provide audit services than the general term for a variety of services outside. Non-audit services can be divided into three categories: accounting, thin Hutchison services, tax services and so on. I believe that non-audit services on audit independence of civil society have a negative impact. First of all, is a CPA providing audit services to major business, but profit margins in recent years the service has continued to decline. In sharp contrast is that non-audit services accounting firms has continued to increase profit margins, resulting in a more receptive and accounting firm to provide non-audit services. When the non-audit services of the revenue exceeds a certain limit, people will think more attention Certified Public Accountants non-audit services, external stakeholders will be worried about accounting firms providing non-audit services in order to obtain the opportunity to ignore or even condone the audited entity management errors in accounting statements and fraud, auditor independence has been compromised. Second With an increasing proportion of non-audit services, audit litigation more and more exposure, so that the public had a crisis of confidence in CPA, the CPA profession has become the professional standards and legal liability system queried by the public . Third, the diversity of non-audit services, it is difficult to establish professional standards in the area and accountability system, so that an independent certified public accountants, objective and impartial reputation has been damaged, and a good reputation is precisely the CPA to better benefit the development of guarantee.

2, the internal control system. Internal control system will have a negative impact on our civil audit. Most of our listed companies come from the state-owned enterprise restructuring, the company shares a high concentration of "dominance", the main body of the state controlling interest or legal person, the principal holders of the absence of effective major shareholders of listed companies and the monitoring mechanism in name only. This has led to internal control of listed companies is very serious, and from the promoters managers or controlling shareholders of the decision-making power is often set , management, supervision in one, in this mode, the traditional audit of the existing listed company shareholders, managers, CPA agency relationship between the three have been essentially reduced to two managers and the CPA the relationship between the person being audited by the managers into the audit client, and determine the auditor's appointment, the number of audit fees and other matters, fundamentally undermine the traditional principal-agent theory under the CPA between the client and the the balance between the CPA and was in a passive position, and even accommodate the authorities, thus undermining the independence of CPAs.

3, regulatory mechanisms and legal regulations. Regulatory mechanisms and imperfect Laws and regulations of civil society will have a negative impact on audit independence. First, the Association of Certified Public Accountants is the administrative department under the Ministry of Finance, as many of its administrative affairs and lack of full-time staff , it is difficult for many accounting firms to conduct a comprehensive audit of the quality inspection and control. Second, although China has promulgated the <"China Certified Public Accountants Certified Public Accountants Auditing Standards >>,<< China Independent Auditing Standards>" and "<Certified Public Accountants The quality control criteria>> However, from the current quality of employees and accounting firms and the overall composition of the practice environment, just by industry self-regulation is difficult to achieve the desired results.

Second, enhance the independence of the CPA Audit Suggestions

1, to encourage the development of non-audit services accounting firms and its full disclosure. In favor of non-audit services and accounting firms expand their business scale, the paper format and enhance the economic independence and improve the financial security factor, thereby strengthening the independent ability to judge CPA to independent, objective and impartial attitude audit opinion. but it is worth noting that, due to expansion of non-audit services will be affected to some extent, audit independence, it requires us to increase the intensity of CPA, while non-audit services, but also on monitoring its implementation, the best approach is to non-audit services for full disclosure. When the accounting firm of the same company that provides audit services and non-audit services, the audited companies should disclose in its financial report, the firm provides The type of non-audit services, the degree and pay the associated costs, while accounting firms should also be publicly disclosed to provide non-audit services for increased revenue and auditor rotation case, the only way investors can determine the non-audit services provided by CPA is appropriate, whether to maintain the proper professional ethics and independence, to ensure CPA did not provide the public suspected cause of independence of non-audit services.

2 and improve the corporate governance structure. Given the existence of listed companies and more "internal control" phenomenon, requiring the company formed by the audit committee of independent directors must play its full role, strict implementation of <<Law>> specified in the proposal or decision of the Board hiring, firing authority accounting firms.

At the same time the employment or dismissal of the accounting firm of independent directors to decide, if we find there is firm issued fraudulent financial reporting should immediately report to the CSRC. In this way, both contain a greater extent by listed companies to employ or dismiss an independent accountant firm to achieve the purpose of fraud, but also effectively improved the CPA audit environment.

3, establish a sound legal system of civil compensation. CPA frequently violate the principle of the independence of the audit of listed companies involved in accounting fraud case, although for many reasons, but the ultimate cause or the interests of drivers. In order to fundamentally solve this problem, we must add penalties of Law, in particular to establish a sound legal system of civil compensation. Although the present China has a <<Securities Law Company Law >>,<< accounting >>,<< >>,<< CPA Law "> and a series of relevant legal norms, but its contents are focused on administrative and criminal penalties, and false accounting information on how to deal with the issue of compensation in a civil little involved, the fact that only the civil liability was a relief to the victims and to maintain investment in public securities markets confidence in the function. the absence of the legal system, often a direct result of the CPA violations, to harm the independence of the audit event. so we have to accelerate the establishment of the legal system of civil compensation, improve the physical specifications of civil compensation, increase penalties on companies making leave due to legal obligations should be investigated with the relevant personnel involved in CPA legal responsibilities, the punishment can not be replaced by the company directors and managers on the wrong punishment.

References:

[1] Guo Xi-Qiang: < "," <Accounting Communications>> 2009.

[2] Yang Jin: < "," <Accounting Communications>> 2007.

[3] Dan: <<degree of internal control of listed companies and audit independence correlation >>,<< Accounting Communications>> 2009. [Paper]