Reasons for lack of audit independence

In view of China's CPA audit market, the author analyzes the reasons for the lack of audit independence from three aspects:

1. Reasons for the lack of audit independence from the perspective of audit relationship.

First, the professional quality of certified public accountants affects audit independence.

The professional quality of certified public accountants includes the professional ability and professional ethics of auditors. By the end of 265,438+the beginning of the 20th century, the biggest defect of auditors' professional ability in China is the imbalance of knowledge structure, with a high level of knowledge in accounting, auditing and other professional knowledge, but a low level of knowledge in other aspects. However, engaging in audit work has to deal with all walks of life.

For example, let a person who doesn't know computer knowledge audit the accounting data of a fully computerized company, and he can't know where the loopholes and weaknesses of the whole accounting process of the company are. In terms of professional ethics, due to the short practice time of certified public accountants in China and the lack of awareness of legal proceedings in the audited units, many auditors yield to the pressure of customers and superiors and publish false reports; It is also common for certified public accountants to lose their audit independence for personal interests.

Second, audit fees affect audit independence.

First of all, low audit cost will affect audit independence. Since 2000, the number of accounting firms in China has increased rapidly, resulting in an oversupply of audit services in the audit industry. In the face of fierce competition, in order to undertake more business and occupy a place in the audit market, accounting firms generally adopt the "low-cost entry strategy", that is, set the audit fee below the audit cost in the first few years, hoping to make up for the previous losses through a longer audit agreement, but low prices are not conducive to market competition. Under the pressure of low audit fees, certified public accountants may reduce audit procedures to reduce audit costs, which will eventually lead to a decline in audit quality, which undoubtedly increases the audit risk of certified public accountants. However, accounting firms will have the motivation of adverse selection, not only competing to reduce fees, launching kickback competition, but even selling audit opinions and other irregular competitive behaviors. At the same time, the low audit fees make auditors complete legal business by lowering audit standards and reducing audit procedures in order to survive in the actual operation process, or cater to the illegal requirements of the audited unit to pursue short-term gains unilaterally, thus colluding with the audited unit to cheat, and disorderly competition against market rules will eventually make certified public accountants lose their audit independence, leaving many hidden dangers.

Secondly, the inconsistency of audit fees will also have an impact on audit independence. Due to the particularity of audit products, their prices are often affected by many factors. Until the "Twelfth Five-Year Plan" period, there was no unified charging standard in China's audit market. Some accounting firms believe that the level of audit fees mainly depends on the size of customers' assets, while others believe that the more profits customers make, the higher the audit fees they should pay. Therefore, some accounting firms charge according to a certain proportion of total assets, some charge according to a certain proportion of customers' operating income or net profit, and more often determine audit fees by bargaining with customers. These practices are neither standardized nor scientific. Inconsistency of audit fees will seriously affect the enthusiasm of certified public accountants, because certified public accountants may get different or even lower labor remuneration while paying the same or even more labor, which leads them to cater to the intentions of some managers of audited units in pursuit of short-term interests, and eventually lose their independence and issue false audit reports.

Third, unreasonable corporate governance structure affects audit independence. Theoretically speaking, the audit principal-agent relationship consists of audit client, audit subject and audit object. The relationship between them should be that shareholders entrust certified public accountants to audit the management of the company. However, most listed companies in China are listed by the original state-owned enterprises through "restructuring", and their shares are highly concentrated in wholly state-owned or holding enterprises, so they cannot be listed and circulated. Excessive concentration of equity has produced many institutional defects. Most members of the board of directors also serve as senior managers of the company, and it is common for the chairman to serve as general manager. The senior management of the company not only carries out specific management of the company, but also nominally represents the shareholders and dominates the major decisions of the company in the board of directors. The members of the board of directors of enterprises and some senior managers are combined into one, and the phenomenon of insider control is very serious. The shareholders' meeting is just a form, and the board of supervisors naturally cannot play a supervisory role. Without a perfect corporate governance structure, it will not be effective.

2. Look at the reasons for the lack of audit independence from the social level.

Insufficient market demand for audit services affects audit independence. Market demand is the source and motive force for the emergence and development of audit. The social demand for auditing is varied. However, in China, judging from the development of the CPA industry for many years, the fundamental driving force for its development is not the information users in the market, but the government; It is not the principal-agent relationship caused by the separation of ownership and management right, but the need of supervision and management of government departments. Due to the specific background of the recovery and development of CPA industry in China, most users of accounting statements in China don't really care about the practice quality of auditing industry.

Due to the lack of demand for high-quality audit services, most accounting firms will lack the motivation to improve their practice quality. China's accounting firms can engage in statutory business such as auditing and capital verification, as well as non-statutory business such as management consulting, but at present, they are still mainly engaged in statutory business, and their services are mainly to meet the needs of relevant competent departments.

Most enterprises employ certified public accountants not to improve their management level, but to meet the requirements of government departments, and regard the services of certified public accountants as a "clearance" procedural work.

3. Look at the reasons for the lack of audit independence from the cultural level.

In the history of China and East Asian society, Confucian ethics has always been the key dimension to maintain social order. Since modern times, due to the bullying and impact of western politics, economy and culture, this dimension has been gradually solved, but it has not completely disintegrated, and it still plays a role in maintaining various social relations among the people.

In all aspects of people's life in China today, the "golden mean" still prevails.

The "golden mean" of Confucian ethics has two basic characteristics: first, the golden mean refers to being just right and going too far. "China Bank" between "Guo" and "Xia".

It is difficult for auditors to grasp "over" and "under". In the face of interests, many auditors chose "down" and gave up their independence. Second, the unique Confucian doctrine of the mean requires people to consider problems and take actions from the overall situation, rather than standing on their own position.

This does not necessarily meet the requirements of accounting professional ethics. "Not advancing" and "not retreating" are "the mean", too modest and pedantic; Advocating novelty and lacking desire will inevitably ignore participation and enterprising; Being content with the status quo and not striving for progress will inevitably hinder innovation and progress. The "golden mean" is good at "judging the situation before acting", unwilling to take risks, and paying attention to interpersonal relationships to obliterate personal views; "Suppress evil and promote good" and "give consideration to both ends" to compromise. The principle of audit is "seeking truth from facts and telling the truth", and the work of audit is "auditing accounts". This principle is contrary to the doctrine of the mean. In contradiction, auditors often choose the "golden mean" subtly. Then for their own work, the three parties involved in the audit can be satisfied and can only sacrifice the independence of the audit.

Measures to prevent the lack of audit independence

When discussing the preventive measures for the lack of audit independence, the author thinks that its essence is to ensure the independence of audit from both internal and external aspects. The so-called "outside" means providing support for independence from the external environment, mainly from the system; The so-called "internal" is to make audit independence become the internal spiritual pursuit and conscious action of certified public accountants.

1. Strengthen the construction of audit system and improve audit independence.

First, balance the strength of the audit and the auditee, and improve the audit entrustment relationship. In China, a country with Confucianism as its spiritual core, if it wants to be strong, it must be endowed with unique national authority, that is, its independence depends on full social recognition, that is, social status. Under the condition of market economy, accounting firms, as ordinary economic subjects, are in a weak position in controlling enterprises with stronger economic strength than themselves. It is suggested that accounting firms engaged in auditing and visa work should appear as public institutions as far as possible, fully represent the interests of investors, and audit economic entities by powerful means, so that their status will change and they will not be at a disadvantage in the face of interference from all sides. Perhaps it is extremely difficult to fundamentally change the status of the two in a short time, then we can also try to establish a balance mechanism to achieve a balance of power between the audit and the audited. If the two are in an equal position, it will be more conducive to auditors to perform their duties, and audit independence will also be guaranteed.

Second, establish a reasonable incentive mechanism to improve agency efficiency. Agency problem may bring efficiency loss and high agency cost. In order to improve the efficiency loss caused by the principal-agent problem, the principal can design a mechanism or contract that can provide attacks and incentives to the agent, so that he can work in a direction that is beneficial to the principal, that is, to provide a system that arranges risks, benefits and incentives between the principal and the agent. That is, the results are optimally distributed between the principal and the agent, and both parties bear the operational risks, so that the agent's utility maximization goal is consistent with the principal's utility maximization goal, and the incentive compatibility between the two is realized.

2. Strengthen the construction of independent consciousness and improve audit independence.

First, strengthen the professional ethics education of certified public accountants. Professional ethics refers to the code of conduct that employees should follow in professional activities. The professional ethics of every profession is very important. To standardize CPA's practice behavior and strengthen CPA's professional ethics education, we should start with school education and establish a complete education system including school education, pre-job education and follow-up education. In school education, professional ethics should be regarded as a compulsory course for accounting majors, and professional ethics education of accounting and auditing should be really valued. In pre-job education, professional ethics can be included in the examination content of the CPA qualification examination system for assessment; We can also establish a professional ethics education and assessment mechanism for certified public accountants, and resolutely refuse to register and employ those who fail the assessment. In the follow-up education, professional ethics should be the content of lifelong education for certified public accountants.

Second, strengthen the corporate culture construction of accounting firms. In fact, the frequent exposure of CPA audit failures in China shows that the whole CPA industry needs to improve its integrity. The "credit crisis" faced by China's securities audit market, on the one hand, reflects that auditors have relaxed their moral constraints in the face of temptation, on the other hand, it also reflects the defects of relevant regulatory systems. Therefore, to improve the integrity level of CPA industry, we should not only strengthen professional ethics education, but also strengthen the corporate culture construction of accounting firms. The corporate culture of accounting firms should include three contents: social responsibility, risk control and customer concept. The most basic obligation of certified public accountants is to coordinate the conflict of interests between capital seekers and capital providers, and protect the interests of capital providers by reducing the information asymmetry between capital providers and capital seekers. The concept of clients advocates that certified public accountants should regard themselves as business partners of clients (capital seekers), emphasizes the orientation of clients' interests, and thinks that attracting clients and providing them with the best service are the focus of accounting firms. This corporate culture overemphasizes the economic interests of capital seekers and certified public accountants, ignoring the relevant interests of investors and other report users, so it runs counter to the concept of social responsibility.

The concept of risk control is between the above two corporate cultures. It is believed that certified public accountants are neutral, neither completely biased towards capital providers nor independent of capital seekers. While paying attention to the interests of certified public accountants, it emphasizes the control of independence risks.

The closer the corporate culture of accounting firms is to the concept of customer first, the greater the possibility of independence risk. Conversely, the closer the corporate culture of accounting firms is to the concept of social responsibility, the more likely it is to restrict the emergence of independence risks. Therefore, accounting firms should pay attention to cultivating corporate culture with the concept of social responsibility, emphasize the social responsibility of certified public accountants to investors and the public, and train employees to establish noble professional ethics through various channels.

7 problem editing

First, the status of audit independence

With the development of China's market economy, the profit-seeking nature of capital has been fully exerted and embodied. The exposure of fraud cases is not registered accountants, but news media or other seemingly amateur report analysts. Why do certified public accountants not only have professional ability, but also perform the necessary audit procedures, but fail to find problems and fulfill their audit responsibilities? Therefore, the independent rights and interests of Chinese certified public accountants are questioned by the public.

Second, the factors affecting audit independence

At different stages of social development, the audit independence of certified public accountants is also affected in different ways. The factors affecting the audit independence of certified public accountants in China mainly include the following aspects.

(1) institutional factors The development of China's CPA industry and its unique institutional background have great influence on audit independence. Accounting firms are all "government-run" or affiliated when they are established. This has played a positive role in the development of China's CPA industry, but it has also brought some negative effects. The natural "mother-child" relationship formed by the subordinate relationship leads to the abnormal development of the audit market. At the end of 1999, although the decoupling and restructuring of accounting firms were completed, this "mother-child" relationship cannot be isolated. Therefore, in order to support the development of local accounting firms, some local governments have carried out excessive administrative intervention, resulting in industry monopoly and regional monopoly, leading to unfair competition among accounting firms, and the audit reports issued by accounting firms cannot get rid of administrative power. In this state, it is difficult for certified public accountants to maintain their independence, thus failing to guarantee the audit quality.

(B) the lack of severe punishment mechanism afterwards. China is still in the primary stage of the development of market economy, the legal system is not perfect, and the means of supervision are not mature, so it is often difficult to find and investigate the fraud of listed companies. Under the pressure of the audited entity, certified public accountants often issue inappropriate audit reports. The cost of fraud is very low, but the benefits brought by fraud to both parties are great, which is the direct cause of violation. In addition, although China's Criminal Law, Accounting Law, Certified Public Accountant Law and Securities Law all stipulate the administrative responsibility, criminal responsibility and civil compensation responsibility of illegal acts of units and certified public accountants, the problems of non-compliance with laws and lax enforcement are more prominent. It has been more than 20 years since China resumed the system of certified public accountants, and the general punishment for certified public accountants involved in fraud cases is not enough, which has not played a role in making an example for others.

(3) Affected by the professional level of certified public accountants, there is still a big gap between the professional ability of some certified public accountants in China and their foreign counterparts. There are not many certified public accountants with strong comprehensive ability, high quality and much practical experience in China, and the time of supervision and training departments in China is insufficient, so it is difficult for certified public accountants to improve their professional judgment ability quickly.

(IV) Impact of Economic Interests There is an objective relationship among the entrusting party, the audited party and the auditors. The problem is that the public does not directly entrust a certified public accountant, but entrusts and pays through the audited entity. At this time, there may be an institutional trap of audit independence, that is, buying audit opinions. Driven by economic interests, certified public accountants charge audit fees from the audited units, but they are responsible for investors, creditors and the public who do not pay the fees, which determines that the independent relationship between certified public accountants and the entrusted units and external institutions has evolved very subtly and complicated. At the same time, the audit business also requires certified public accountants to be familiar with many actions, decisions and judgments of management authorities that have a significant impact on financial reports in order to make correct judgments. Therefore, objectively, certified public accountants and management authorities must maintain a close working relationship. It is difficult for certified public accountants to remain completely independent.

Three. Measures to improve audit independence in China

Certified public accountants must maintain their independence. While strengthening the professional quality of certified public accountants, we should devote ourselves to forming an adequate audit market, clarifying the legal responsibilities of certified public accountants, perfecting the dual supervision mechanism of certified public accountants' audit, and optimizing the practice environment, so as to effectively enhance the audit independence of certified public accountants in China.

(1) Improve the organizational structure and establish an adequate audit market.

1. Further improve the organizational system of accounting firms and implement the partner system. In the initial stage of decoupling reform, most enterprises choose the form of limited liability organization. The registered capital of limited liability firms is too low, which is not conducive to the establishment of risk awareness of firms and certified public accountants. The partnership firm bears unlimited liability, and the interests of partners are closely related to the performance and fate of the firm, which has the pressure and motivation to enhance risk, responsibility, quality and brand awareness. The partnership system with unlimited liability can provide greater binding force for the independence of certified public accountants and adapt to the current economic situation.

2. By improving the capital market and corporate governance structure, the choice of accounting firms will be changed from government choice to market choice, thus reducing the possibility of administrative intervention. Reform the client system, change the audit client to the enterprise shareholders' meeting instead of the management authority, urge the shareholders' meeting to truly fulfill its due rights and obligations, and strengthen the owner's restraint on the operators.

3. Improve audit market access standards. Large accounting firms have stronger support ability, which is conducive to diluting the regional color of audit activities and changing the artificial division caused by historical reasons such as administrative intervention. In today's increasingly international audit market, competitive accounting firms are even more needed. Therefore, appropriate measures should be taken to promote the merger and development of the firm and form a full audit market.

(2) Improve the dual supervision mechanism of self-discipline and government supervision of the CPA industry.

China Institute of Certified Public Accountants manages the national social audit industry according to law, and accepts the supervision of the Ministry of Finance and the Audit Office according to law. China Securities Regulatory Commission, Audit Office and Ministry of Finance have formed a series of external government supervision systems. It is necessary to clarify the division of responsibilities and cooperation of these three regulatory agencies, establish and improve the organic coordination mechanism between these external regulatory agencies and the Institute of Certified Public Accountants as a self-regulatory organization of certified public accountants, avoid multi-head supervision or regulatory vacuum, and give full play to the roles of regulatory agencies and self-regulatory agencies.

(3) Defining the civil liabilities of accounting firms and certified public accountants.

In our country, the punishment for violations of accounting firms and certified public accountants is not very clear. Although the current Law on Certified Public Accountants stipulates administrative liability, criminal liability and civil liability, it lacks maneuverability. In practice, administrative responsibility is also emphasized, and civil liability is rarely used. Strengthening civil liability is to restrain CPA's profession, standardize CPA's morality and integrity, at the expense of CPA's economic interests. From the legal point of view, the means of market is the means of civil compensation. The punishment of certified public accountants and accounting firms in the United States is mainly civil compensation, which plays an important role in restraining the behavior of certified public accountants and accounting firms and improving audit quality.

(four) to improve the professional level of certified public accountants and strengthen the construction of professional ethics of certified public accountants.

1. Improve professional ability. Strengthen the follow-up education of certified public accountants and improve their technical level; With the opening of the audit market, learn from the advanced experience of foreign certified public accountants; Strict annual inspection system for certified public accountants; Hold regular examinations to check the professional level of certified public accountants.

2. Consciously implement the audit avoidance system. Article 18 of the Law on Certified Public Accountants clearly stipulates that "if a certified public accountant has an interest in the client, he shall withdraw; The client has the right to ask him to withdraw ",and the behavior that may lead to direct or indirect economic interests affecting audit independence is prohibited (Article 20). The Regulations on Certified Public Accountants formulated by various localities have made detailed provisions on situations that need to be avoided. Therefore, in the process of public practice, certified public accountants should actively implement the withdrawal system according to law to ensure the independence of audit.

3. Strengthen the professional ethics education of certified public accountants. The professional ethics level of certified public accountants is closely related to maintaining independence, and all the lack of independence is related to the lack of professional ethics. Professional ethics is the internal motive force for CPA to maintain independence. Only when certified public accountants have a high level of professional ethics can they consciously resist the pressure of stakeholders, remain independent and treat stakeholders fairly and objectively. Therefore, we should always make unremitting efforts in the professional ethics education of certified public accountants.