Auditing standard-setting and change the typical economic analysis point of view

[Abstract] auditing standard-setting and change the Economics of ideas including the use of transaction cost theory to explain the development of guidelines, criteria by institutional change theory to explain the changes. These views both advantages and also there are some problems. Use of non-equilibrium theory to explain can be divided into five stages.

China is currently in the second phase, to achieve the ideal model it will take a long time. Auditing standards are developed or approved by the authority, and to clear the audit of the main qualifications to guide auditors audit the quality of work and evaluation of professional norms . with the Economic theory of the development of auditing standards and auditing standards change is an important part of the study. This paper summarizes the relevant auditing standards in the development and changes in the Economic analysis based on the views put forward their own views.

First, the auditing standard-setting and change the typical Economic analysis point of view
(A) the development of auditing standards: the transaction cost theory to explain Economic theory under the new system, the demand for the system because the current state actors can not get the potential benefits. Some scholars believe that auditing standards can reduce audit business transaction costs, so that stakeholders receive the potential benefits from the transaction. This is mainly reflected in:
1 • reduce audit costs of the transaction information in the transaction in the audit, the Shenji clients not only to understand the subject Reputation Evaluation on the audit, the business Ability Evaluation, but also understand the wishes of their compliance with the Agreement. Access to this information is to pay the cost These costs can be called information costs. [1] standardized audit auditing standards provide the basic standards of behavior, the different aspects linked to these standards help to evaluate the reputation of each audit subject, and then help clients streamline decision-making process, according to The potential partners in the past to infer the behavior of their own future behavior is most likely to produce reasonable expectations of future position.

2 • the right to reduce audit transaction costs due to the limited definition of rationality and incomplete contracts, determining rights and obligations in reaching the agreement still faces the right to re-define or further define the problem. [2] can effectively reduce the auditing standards the right to audit transactions, definition of costs, although it is not able to eliminate this cost. First of all, the right to establish auditing standards defined the basic principles. Second, the auditing standards of the main direct exercise of the right to determine the scope of the audit. Again, auditing standards for the audit of the transaction the right to dispute settlement procedures provided. In an environment full of uncertainties, the characteristics of the audit with bounded rationality among actors can not sign a contract to predict all possible events during the full contract. auditing standards established to resolve disputes procedures, so that the parties did not seek termination of the contract dispute under a reasonable solution.

3 • reduce the cost of the audit oversight sanctions the principle reason for the profit and loss account according to the audit subject, the violation of the rules system, the net result of this action must exceed the net costs. If they suffer sanctions for breach of the system, then They should include the losses caused by such sanctions to the cost - benefit analysis. because of the reputation value, the pursuit of maximizing their own interests even in the audit of the main "short-sighted self-interest" requirements and auditing standards are not relative to the requirements of agreement, it will also comply with auditing standards, to perform the audit related agreements, which can greatly reduce the sanctions for the supervision of the costs of opportunistic behavior. (b) changes in auditing standards: theory of institutional change to explain many scholars agree with the domestic system change theory to explain changes in auditing standards. [3] source of power from the system Innovation and conditions for the proposed new institutional Economics theory of institutional change, institutional change is the internal driving force of Economic entities to maximize the "potential profit." the potential benefits of institutional change is greater than the total cost does not necessarily lead to changes in system Innovation, institutional change only when the potential for power systems group revenue is greater than the organization of the new system operating costs, is the only way to generate institutional change [4]. institutional change can be divided into two modes: one is the induced change, the second is a mandatory change. Induced Changes in auditing standards is the subject of the demand from their own interests, not satisfied with the existing or the new auditing standards Auditing changes have occurred in the demand; or the main supply is from the interest groups they represent, when the emergence of new profit opportunities from time to time the changes occurred. It has a gradual, spontaneous, autonomous features, fully available Comparison of cost-benefit model and the supply and demand model to explain the system suppliers as innovators or just producers of the system is a natural response to the demand and response. mandatory change refers to changes to existing auditing standards or the alternative is not the individual the incidence of profit opportunities, but by government order or Law to enforce. It can avoid the existence of Induced Changes in the external process and free-rider problem, changes can also reduce costs.

(C) the evaluation of this view
1 • Advantages of the advantages of this view in the following six areas:
(1) help from a new perspective to deepen the understanding of auditing standards, improve the quality of auditing standards and depth of the various points of view from a different perspective of Economics, describes the development and changes in auditing standards reasons, so we are auditing standards Research out of the traditional "auditing standards on auditing standards for" the limitations of the scope broke the shackles of a single discipline, to achieve a cross-disciplinary, multi-angle observation and analysis purposes, to find a new starting point for the development of auditing standards and change to provide a new theoretical basis of the rise of auditing standards to a new level of theory.

(2) transaction costs reveals the intrinsic link with the system of choice theory suggests that transaction costs, the guidelines of the design, development, implementation and reform is a cost, and then specifying the different systems, a system of different design, you do not establish appropriate systems, you do not change and how to change the system, need and taking into account the level of transaction costs. [5] In addition, the development of guidelines the power arrangements, the transaction cost theory is also an arrangement of a specified depth in any area costs are the lowest of the situation does not exist. theory of arrangement is to look for integration and coordination between the Government and the fulcrum of the market, and this pivot point in a different economic environment and the economic system should be different.

(3) reveals the transaction cost and resource allocation efficiency of the internal relations profound understanding of transaction cost theory to the real world is a positive transaction cost world, there is clearly pointed out the need for auditing standards, which regulate the reality of practice to ensure the quality of information, maintenance of title to property improve the efficiency of resource allocation.

(4) knowledge of psychology to borrow, subject to the audit of compliance with auditing standards of the more convincing interpretation of transaction cost theory in the original audit subject will be in violation of the initial desire to maximize their own interests --- are still under the condition of compliance with auditing standards included in the analysis of individual psychology, to achieve the audit, Economics and psychology of mastery, make analysis more with the human and convincing.

(5) changes in auditing standards specified by the real source of institutional change theory reveals the changes in auditing standards is determined by its various contradictions that exist within the trigger, and clear criteria for Innovation may be adopted only when the potential for profit is greater than for access to this kinds of profits to pay costs, criteria for Innovation to occur, which leads to changes in the guidelines. This theory changes in auditing standards dig out the real root.

(6) a reasonable interpretation of reality in the "second best" system was adopted because institutional change theory to analyze the difficulties of institutional change and Innovation or constraints: (1) path dependence that the inertia characteristics of the existing institutional arrangements; (2) innovative " delay ", ie the one hand, the existing institutional arrangements limit the scope of institutional arrangements and the evolution of the existing system often have" residual value "; the other hand, that institutional innovation will lead to a complex adjustment of interests, and the invention of a previously not new system takes time and trial and error, while the limited rationality of people, information costs and ideological factors may delay the system of innovation; (3) innovator's cognitive limitations; (4) the cost of innovation systems. Because of these factors combined effect led to the "second best" solution is adopted or maintained the original system, and give the optimal institutional change.

2 • the shortcomings of this view
(1) transaction cost theory to explain the lack of basis in reality first, the concept of transaction costs in the development of guidelines to reduce the cost of supervision and interpretation of the sanctions, and the reality of our country do not match. China's current low quality audit information, the user can not be based on audit reports The judge made the right decisions, leading to investment decision-making there is blindness; the same time, the state's punishment, lack of effective monitoring and inhibition, a serious impact on the effectiveness of China's capital market, there listed company "misappropriating" behavior and "bad money drives out good money" phenomenon and a large loss of state assets. Second, define the cost of reducing the power also exists to explain discrepancies with the actual problem. China's current powers and responsibilities of civil audit of serious phenomenon is unclear, the audit staff able to undertake the business of the audited entity compliance status of poor instruction everywhere, which is clearly defined with clear analysis of power is a contradiction. national audit authority staff shortage and heavy task, leading the audit team leader is responsible for the implementation of the system difficult to really not be responsible for the authenticity of the audit report, has seriously affected the quality of audit reports.

(2) institutional change theory can not clearly explain the changes in auditing standards means of institutional change from the way of our amendments, changes in our model can not simply fall into any category. At present, China's auditing standards developed by the Government of Unity promulgated, the form appears to be a mandatory system changes. However, considering its deep-seated change, with the changing economic environment, people's ideological and moral values had corresponding reforms necessary requirement to develop guidelines for the new system to achieve the pattern of redistribution of economic benefits, thus contributing to the occurrence of institutional change. In addition, auditing standards in the development of the process will be heard and to consult with relevant observations and recommendations of auditors, and its standard-setting process to a certain extent, is built on over democracy. Therefore, the development of China's changing status of auditing standards can not be a perfect theory to explain institutional change.

Second, the auditing standards of the non-equilibrium theory to explain
(A) a brief description of non-equilibrium theory I believe that should be a non-equilibrium theory of the development and changes in auditing standards discussions. The United States, Robert • Cloer is the father of modern non-equilibrium theory, the basic point is: the currency in the contemporary economy, there is a wide variety of monetary intermediation, it makes the supply and demand in time and space are greatly separated. The market's diversity and complexity of the transactions, the economy full of unbalanced trade, full of economic fluctuations predisposing factors. and this economic system is unable to achieve self-regulation through the general equilibrium, and therefore shows the trend and volatility of non-equilibrium [6]. emphasizes that non-equilibrium theory of asymmetry and instability, to recognize and address the contradictions and conflict, while stressing the contradictions harmony and stability in the conflict; its focus on dynamic analysis method to study the causes and consequences of non-equilibrium phenomena, study the process to achieve a balanced and balanced process of change, and in these processes It is presented out of a consecutive non-equilibrium state. the system of the theory into the analysis of the development and change into, you can see: in the audit market, there are multiple stakeholders, their needs for auditing standards and supply can not be achieved, on balance, the continuous generation and intensification of conflicts, which is a predisposing factor in institutional change; when the conflict reaches a certain level, so the market can not ensure that the economy is an efficient equilibrium, it can rely on government intervention to eliminate coordination failure, to promote economic equilibrium to the optimal exercise, to ensure full use of community resources. Links to Research Papers Download http://www.hi138.com (b) the development of auditing standards and change of use of non-equilibrium theory Non-equilibrium theory to explain the development of guidelines and change needs to be divided in five stages.

1 • the first generation of non-balanced and balanced implementation: the initial development of auditing standards with the separation of ownership of the enterprise system and economic accountability have emerged, the property owner presented the audit requirements, thus the formation of the tripartite relationship between the audit were: client, the audit subject and the object being audited. Then, with the share system enterprises and listed companies will produce, but also presented the audit report to the public disclosure requirements, so that the public users of audit information --- as audit The fourth party relationship between people. Obviously, the Relations of their respective positions and interests of people are not the same, making the audit of the audit results do not meet all the requirements of the Quartet between people, leading to conflicts of interest between them and the intensification of production. In order to balance the kinds of conflicts, they have the demand of developing auditing standards. But relations between the audit were unable to reach a unified four-consensus, to develop a system for the implementation of auditing standards, leading to further intensification of conflict has seriously affected the country's financial market stability. countries in order to maintain the normal order of society and the financial markets, to develop a unified specification and enforce auditing standards, temporarily resolve the contradiction, the first of the auditing standards to achieve demand and supply equilibrium.

2 • the original break and balanced implementation of the new equilibrium: the revised auditing standards through the test of practice and the continuous emergence of new problems and new situations, and gradually exposed the imperfections and deficiencies in the original guidelines, and not consistent with the actual place no longer able to meet the real interests of the parties the balance of interests between the need to further intensify the internal contradictions. but not as long as the threat of intensification of the existing guidelines, it will still maintain the stability of the original criteria. However, when the conflict intensified Dao certain �̶�, breaking the previous equilibrium state, �� parties Jiuhui revised guidelines for a re requirements to achieve changes in the guidelines. But at that stage, the Quartet between the theoretical level although there were some improvement, but still there is no capacity to develop more countries to develop a more comprehensive audit standards and reasonable auditing standards. Therefore, the revised mandate of auditing standards borne by the state still needs to coordinate practical contradictions, by the standard setters to be more consistent with the reality of the new guidelines, to reach a new equilibrium.

3 • the original and the first to break the balanced realization of two-balanced: the guidelines formulated by the state audit, the audit body to develop uniform guidelines for the specific implementation of the audit at this stage, four-level relations between the theory and practice of human capacity has reached a certain height, in particular audit subject engaged in the process of audit activities can be compared to the other three have more comprehensive and timely information, while their respective interests and conflicts have a more profound understanding of the gradual accumulation of a trade-off the ability of these relationships and contradictions, and already have developed to meet the parties at the request of the auditing standards and guidelines established by their significantly higher than the auditing standards developed by the state more perfect, more in line with reality. On the other hand, the national audit standard setters can not be comprehensive, timely access practical reality, leading to criteria established by the lag and imperfections, and its revised auditing standards in balancing interests, meet their requirements of auditing standards become increasingly inadequate. Therefore, to reduce conflicts, the State is bound to choose decentralization, part of the audit standard-setting authority delegated to the audit subject, by their conduct consultation and negotiation, consensus, and with its close ties with the practical advantages of the development of specific auditing standards. However, for "self interest" considerations, and to safeguard national interests and social stability, the state must retain some power, the macro guidance. Thus, the ultimate realization of the standard-setting dual-equilibrium: the auditing standards developed by the state's guiding principles, and grasp the general direction, provides the basic auditing standards, to safeguard the normal order of society and the financial markets; by the audit subject audited objects according to different specific audit guidelines for the development of uniform rules.

4 • the original and the first to break the double-balanced "single dynamic" dual-balanced realization: Dynamic generation of specific audit guidelines for the accelerated process of social economy, the changing economic realities and information, the original double-balanced not to meet the needs of the community again, The main reason is the unity of the audit of the main development of the audit based on specific criteria can not change the actual situation to change and adjust accordingly, keep up the pace of change of information, is seriously lagging behind in the audit practice. Quartet conflicts between the interests of the re-intensification, and therefore produce Lepo Chu specific guidelines mandatory uniform standards, develop criteria for specific audits in the dynamic demand, that the audit subject based on the actual situation, "local conditions", for different conditions, choose their own criteria to solve practical problems.

5 • "single dynamic" break the double-balanced and to achieve the ultimate "two-way dynamic" dual-equilibrium model: Dynamic guidelines and specific auditing standards auditing standards of the stage is the ultimate ownership is the most ideal mode is difficult to achieve. Single dynamic double equilibrium seems very reasonable, but in reality is not. First, we must understand the dynamics in a certain specific criteria are implemented within the national guidelines, that is, this dynamic is a certain limit, it can neither go beyond the framework of national guidelines can not choose which, but must meet all guidelines. But as accounting principles in the principles of objectivity and relevance, as both can not have both at the same time, it must be asked to choose one of them. The author is more endorsed the relevance, that is best able to meet the practical needs of the guidelines is the best criterion, without formality. According to this principle, countries can develop relevant guidelines within the scope of, and in the implementation of the audit process audit subject, you can own Choose specific criteria to meet the social needs of all stakeholders, and finally to the national guidelines and specific guidelines for auditing two-way dynamic equilibrium.

Third, the status of auditing standards and auditing standards in the future development of China's current development and change is in the second stage: the breaking of the original balance and the new balance to achieve, there are a number of problems to be solved. For example, the main basis for the development of auditing standards in the past the lessons learned, for the new situation is considered less; the combination of theory and practice there are gaps, theoretical results out of touch with the real work; audit criteria for the degree of perfection with its own incompatible, such as the importance of professional care, audit risk assessment, lack of maneuverability; audit Law enforcement environment is incompatible with the existing audit management system and so on. However, from our current productivity level is not high, the audit career later, the auditor's professional judgments and the limited practical and theoretical levels situation, the current implementation of the universality of the countries to develop stronger, more specific and clear terms of auditing standards is more realistic and necessary. However, to achieve the changes in auditing standards and the ideal model of development will take a long time. In this We should focus on the period from the following aspects:
(A) the implementation of auditing standards and the modifications combined. Auditors should actively and conscientiously implement the principles of auditing standards, procedural requirements, to grasp the basic spirit of auditing standards. In this context, should be based on different types of audit services characteristics and needs of work to do in dealing with the specific operation to enhance the auditing standards of operation.

(B) the actual audit work closely and continuously improve auditing standards. There guidelines for the audit of the audit practice with respect to the terms and lag too far ahead, based on actual performance, through the audit continue to be revised and improved practice.

(C) the implementation of a sound mechanism for auditing standards and improve the default cost, increase audit penalties. Law enforcement is not in place not only directly affect the quality of the audit, will seriously affect the credibility of the audit, so the state should increase the offense for the violation and of punishment.

(D) strengthening the internal audit industry self-regulation, while actively improving the legal awareness of the whole society. So doing, contribute to society's general understanding of the audit and trust, on the other hand can make the supervisory role of the public can be a real play, to to promote the rationalization of the social and economic order.

(E) to improve the quality of auditors, standard audit reports. First of all, you can gradually establish a qualification system audit team leader, project leader commenting system, audit system of accountability for Law enforcement and other mistakes, to put pressure on auditors to promote the quality of auditors continuously improve; Secondly, the project appraised by the audit and other methods to stimulate the auditors are rising enthusiasm, encouraging auditors to realize their own value; [7] again, and actively create conditions for increased training efforts, the two-way through the theory and practice training, thus creating a new generation of high-quality audit personnel.

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[3] Lin Zhong high, You Xueying, Xu Zhenggang. Independent audit theory [M]. Shanghai: Lixin Accounting Press, 2002.

[4] Lu Mingxiang. Institutional Change and Institutional Analysis of Innovation conclusion [J]. Basic theoretical Research, 2002, (4).

[5] Dennis Lui. Auditing standard-setting system - A system of Economics [J]. Auditing theory and practice, 2001, (4).

[6] Hu on behalf of the light. West and influence the evolution of economics [M]. Beijing: Beijing University Press, 1998.

[7] State buildings. Implement the auditing standards to ensure that audit quality [J]. Zhejiang audit, 2001, (6).

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