The process of audit of contract system

[Abstract] shows the evolution of the audit contract system, the audit client and the auditors there is some diversity; such diversity that the different social audit found. Sign the audit contract, started the audit reports; audit arising by contract because of the Development contract. signed the audit contract is conditional, an audit form and content of contracts, commercial contracts with a significant difference; However, the audit contract at the start auditing behavior and business start trading behavior in terms of the contract, but has a certain degree of similarity.

Behavior is a behavior of the audit contract. Audit arising by contract, because the Development contract. Narrow the audit contract should refer only to the audit by the auditor and the client signed the contract, the audit contract should be generalized in the narrow sense refers to the outside audit contract additional auditors and audited to enter into the contract. In general, based on Economic considerations, in reality, you can narrow generalization of the audit contract, so that combined. examine the audit contract system, helps to answer the audit have and Development of the law, and to predict the future Development of the audit. This is only an initial in this area of Research.

First, a historical perspective: the process of audit of contract system of accounting in accordance with well-known American scientist Littleton (ACLittle-ton) to say, the UK audit system sprout in the 16th century manor house and municipal finance in the UK on the charge of accounting matters Check the integrity of those (Wen Shuo, 1996). Obviously, when the audit is essentially an internal audit should be separately �� and national audit, the audit is not a private certified public accountants. to 1720, "South Sea Company" (The South Sea Com -pany) bankruptcy, the importance of the CPA system was only concerned about the society in general. If we agree that many people recognized Charles • Snell (Charles Snell) is the "world's first private auditor" (Shuo Wen , 1996), then bankruptcy may be from the South China Sea to see the initial audit of the contractual relationship of civil audit. Nanhai bankruptcy caused great social repercussions, because it allows investors to lose millions of pounds of large sums of money, but also the whole country Business Development delayed for half a century, which led to the formation of a special parliamentary committee set up under the Sawbridge of the company trading company (Saw-bridge & Company) accounts for the inspection. Charles • Snell commissioned by the Council as Check out this task, and submit the audit report. In this audit activities, audit as a natural person who is learning calligraphy teacher and accountant Charles • Snell, the audit client is a parliament, to be audited are Sawbridge Trading Company The three formed the audit relationship, and to achieve the intended results of audit activities. Unfortunately, we did not find the power of attorney and other contractual audit literature, but as long as there is "audit" of the facts, we can infer the existence of objective the audit contract; whether written or oral contract, the contract can not be divorced from nature. here is worth noting that the Parliament as a company audit clients.

19th century, 40 years United Kingdom's <<the company terms the Act of Union>> request, shareholders of the railway company should be appointed as auditor, you can also hire professional accountants to assist the auditors issued in implementation of operational .1962 audit services by the Companies Act no longer requires shareholder as, accountants either as statutory liquidator of an insolvent company, you can also run the company as auditor. When a statutory liquidator, the audit on behalf of the creditors of the liquidation of bankrupt enterprises (Michael • Chatfield, 1989). Due to historical reasons, it was difficult to find data that may exist in the audit contract, but once there is in fact the audit, the audit contract is always an objective reality, even if only the so-called "gentlemen's agreement." fairly standardized modern CPA Audit; three kinds of people to contact the audit relationship can generally be through a written contract to establish. Although the audit in the audit client in an enterprise may exist many forms, but the contract audit responsibilities related persons, have tended to clarity of legal liability. The following is the author of a representative of the UK audit of the audit relationship between the development of the situation as well as a summarized description of contract ��: if they do not rigidly adhere to some of the historical details of the individual to reflect on the contents of the table to analyze, you can see by the Auditor --- business operators unchanged, audit clients and audit the diversity of people there. This phenomenon is a normal situation. because: audit function to play can be adapted to various needs, with several audit clients also not surprising. Even today, in addition to the forensic audit of financial statements for the purpose from the needs of investors, there are management audits, risk assessment and system administrators from the need for such assessment, material to ensure that audits , the repayment capacity evaluation, project audit results from the needs of banks and creditors, the identification of Economic cases and bankruptcy liquidation from the Court's needs, the Government's Economic responsibility auditing, and other officials from the Government or other agencies need to escape personal responsibility for the company staff can also serve as audit clients.

In fact, in countries CPA audit, the audit client has always been complex. Worthy of consideration is the accounting statement audit client to determine what principles should be followed? Course, "who commissioned pays", the audit information All users have to act as the audit client's expectations, but the real people who act as the audit client is being audited person shall have the power of control person, that person actually be a shareholder. The audit reflects the diversity of human society different understanding of Certified Public Accountant. an enterprise engaged shareholders as auditors, may be an optimal state; on the one hand due to a decrease in agency-level transaction cost savings, on the other hand can reduce the number of audit information due to information transmission distortion, the relative increase in the intensity of supervision. In fact, the shareholders can not reach the professional level of Certified Public Accountants, the owner can not exceed the psychological shackles of self-interest, then, to "transcendent position" (ie third position) appears up accountants, shareholders may well act as a replacement auditor. As for the operators as employees under the post audit, internal audit of its essence is an alternative to external audit, which is obviously an unreasonable system configuration. Today, the social development has led to Three of the audit's existence: civil audit, state audit and internal audit. For a large state-owned unit, the three audit could be used as the audit object. At this time, the internal audit system may be friction States can pass laws, administrative disharmony within the audit contract to adjust. audit contract system is continuous improvement, this improvement both parties to adjust the audit contract and the corresponding changes in requirements, but also with the social promotion of the legal system resulting from oral to written lease contract, contract-style from simple to complex-type contract, contract from the custom format to the specification of multi-level format of contract form and content of contract changes.

Second, signing a contract to explore Motivation
AC Littleton (1958) examined early in the audit concluded that, "Of course, this form of audit of receipts and payments of cash just to check the integrity of; However, it embodies the concept not limited to the audit in cash payments. People understand the concept from this audit, the management of other forms of fiduciary duty should also be tested "(AC Littleton, 1989). Clearly, Littleton is" entrusted with Economic responsibility "concept advocates. Here, the audit into a supervisory tool for the fulfillment of fiduciary duty, is "the implementation of government policies and a means of safeguarding public welfare." audit contract between the client and the auditors to establish audit relationship, is the audit activities starting point. The question is really attached to this contract, "fiduciary Economic responsibility"? In fact, the answer should not be made lightly. I believe that the forensic audit of financial statements and other conventional special audit of equal treatment, and Noting the role of accountants as the reality of the original will be further expanded. the so-called audit check "the fulfillment of fiduciary duty", but this feature has been the role of local space, as well as to convey clear information to improve business performance, improve management systems, maintenance of financial law and assessment of enterprise risk and other fields. In this sense, "functional absence of" specific "fiduciary duty of the economy" is more logical.

Third, a prerequisite for signing a contract to achieve the audit client and the auditor's contract, should have the following four conditions: first, the internal audit with the audit needs of the client. This needs from just the absence of professional supervision. In a modern company, property ownership and management separation means that changes in socio-professional division of labor, private property rights in the context of the operator's control becomes necessary. reason to further that a private property but also have both at the same time as the operator of those, he will not produce the audit requirements. only the owner of "separation of ownership" of private economic environment, it contributed to the audit commissioned by the internal needs of ��. the other side is that the audit and the audit client does not have the internal demand, but the Government requested the case of implementation of the statutory audit; this time, the audit client (nominal) in the process of signing the audit contract, audit findings may be the pursuit of too much idealized and not to consider the contract itself Some issues (such as, the price does not matter if the audit opinion can be purchased, or even high demand trial), the contract could eventually lead to significant reduction in the actual sense, the contract for audit quality assurance audit objective may not be concerned about. Of course This is a more special case ��. Second, by auditors independent of the audit client. This is an ideal state, may prompt the audit client's controls being audited, but in reality it often found to be auditors to act as the audit client's situation. If the Auditor is also the audit client (nominal), the same audit opinion may be the opportunity to buy at high prices, the value of the audit itself is greatly reduced. In fact, the audit commission person who is being audited, there is a paradox: the demand for nominal changes to the audit of the audit in fact negative resist or exploit, damage the image of the audit profession. Third, the audit client on the person being audited have control over it. from the property constitutes a point of view, the right to audit should be part of the property ��; in the "separation of ownership" at the beginning, the right to audit reserves the right to remain a part of property owners; when the owner of the lack of performance evaluation on the operators professional competence, the auditor as an agent to exercise an independent audit function. Links to free download http://www.hi138.com the same paper, owned by the person being audited management rights are property rights is also part of this determines the separation of ownership and authorization management, the owners are still a variety of operators can exercise control. This control includes the right of supervision (including the right to audit) and require the operator to submit to supervision (including the agent's audit ) rights. If you do not have the right to audit clients, for the audit of the audited person resisted, it will not perform the audit. derived here can be such an issue within the company, the higher the lower levels can employ the implementation of CPA audit, but lower levels have no right to appoint a registered accountant for the audit supervisor, indicating that control of the audit in addition to the attachment point of a rich system of rights among the orderly. Fourth, auditors independent of the audit client. modern audit to "independent and objective "," third party position "itself, as a professional in the formation of Certified Public Accountants, the auditors independent of the audit client is a representative of the flags, shareholders or managers on behalf of employees to become certified public accountants as auditors to act as Auditor �� supplement the formal institutional arrangements in the form, largely derived from the modern internal audit. Thus, in today's world, as the subject of private certified public accountant audit practice, are independent of the audit client. auditor independence and audit client are civil liability on the legal significance of the main body, which is beneficial to both sides of equality, fairness on the basis of signing the audit contract.

Fourth, the audit contract form and content analysis of the audit in the audit client and the contract signed between, although the form of contract is not important, but its study should also be concerned. There is no discovery of the original contract auditing profession sample, this study brings us a lot of difficulties. audit began as a simple contract, mainly in oral form ��, later complicated, into the basic form of writing. The reason is that in the audit profession Location is not clear before, the audit commissioned by the Parliament, representatives of the shareholders or by the implementation of the audit staff to implement the audit managers, can control some of the excess through the pursuit of interests, not for the tendency of improving services, including the main reasons is , the lack of evaluation standards for audit quality, reduce the risk of pressure to prevent the CPA, some practitioners attempt to evade the protection provided by industry standards of social responsibility audit, which is obviously abnormal. �� service time is often with some uncertainty. As a business unit being audited, the larger individual particularity, the specific circumstances vary widely, with the characteristics of a team to practice as a chartered accountant management and organizational some reason, the length of the audit cycle is very difficult to make a subjective prior accurate judgments. the most critical factor is that the audit process is different from the industrial batch processing, assembly-line type of production process, each link can not determine the precise control standards, and therefore, not possible to sacrifice quality in the efficiency of the conditions under , the audit time frame often has a flexible service features. service prices follow a calculation basis. fee is "in accordance with the Agreement of the personnel assigned to calculated on the basis of time required, plus the cost of direct advances.

The hourly rate per person will be the degree of responsibility and their experience and skills needed to be different "(International Auditing Practices Committee, 1990). This should include two assumptions: First, the accounting firm the charges and the quality of the firm's practice is relevant; Second, the accounting firm for the audit assignment staff have the appropriate competence on the job. Unfortunately, the reality of market competition may deny the two key assumption, because the lower price competition, government price, high-priced purchase of Certified Public Accountants audit opinion and the scale is too fast expansion, the lack of effective practitioners continuing education, etc., so that the quality of the audit fees associated with the practice declined in the post audit practice asymmetry of the actual capacity of the individual, then, the price leverage the role of the audit market is not obvious. of course, all accounting firms may be allowed under regulations issued by a copy of your price list, there may be a "bargain" consultative mechanisms, but the future is unpredictable course of their practice may be agreed in advance the issues of "pay" a certain irrationality; Thus, according to "discount" price list and the time required for audit fees could be an optimal solution . The question is: how to prevent the CPA through the "lazy" to work longer hours? possible solution is to determine the time limit for submission of audit reports and audit work the longest tolerance time, and if does not meet certain conditions, you may lose the Contracting opportunities. breach of contract judgments there are many obstacles. relative to the contract for the sale of goods transactions, the audit contract can not be refined in many matters, in particular, the audit responsibility and accountability is difficult to define, in the event of legal proceedings, the audit failure persons by whom much responsibility and assume responsibility and become a common problem. enterprise management accountability for performance is not good, is bound to lead to audit failures, and can not give an exact conclusion. breach of contract defined only by the audit resolved through negotiation between client and the audit or seek legal means.

However, in normal circumstances, an interest both from the principal-agent consistency of understanding, may have contributed to an informal contract outside the contract, the result is that complaints by the principal auditor of the events are rare. Audit contract is a special , it does not like the law as authoritative as a public contract, not as clear as the contract for commercial contracts, but this does not preclude the importance of the audit contract: regulation and constraints related behavior of both Parties.

References:
[1] Feng are Branch, 1996, "The Dynamics of Internal Audit", "" Modern Finance>> Section 12.

[2] von all subjects, 2002, "<CPA Audit Quality Control Theory Research">, China Financial and Economic Publishing House. International Auditing Practices Committee, Deh-Ming Chang translation, 1990, "" International auditing standards>>, to write papers Dongbei University of Finance published community.

[3] Michael • Chatfield, Wen Shuo such as translation, 1989, "" Accounting Thought "A History> China Commercial Press.

[4] Marx, 1976, "" Marx and Engels Collected Works> "(23 volumes), Publishing House.

[5] AC Littleton, Lin Zhijun such as translation, 1989, "" Accounting theoretical structure>>, China Business Press.

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