Audit mode change,corporate governance and audit effort

• 作者: Limei Cao Limin Zhang Wanfu Li
• 来源期刊: 中国会计学刊：英文版
• 学科: 经济
• 关键词: AUDIT EFFORT Risk-based AUDIT mode CORPORATE gover
• 年，卷（期）: 2015,（4）
• 页码范围: 315-335
• 页数: 21页
• 分类号: F271

摘要

This study investigates changes in audit strategy in China following the introduction of risk-based auditing standards rather than an internal control-based audit mode.Specifically,we examine whether auditors are implementing the risk-based audit mode to evaluate corporate governance before distributing audit resources.The results show that under the internal control-based audit mode,the relationship between audit effort and corporate governance was weak.However,implementation of the risk-based mode required by the new auditing standards has significantly enhanced the relationship between audit effort and corporate governance.Since the change in audit mode,the Big Ten have demonstrated a significantly better grasp of governance risk and allocated their audit effort accordingly,relative to smaller firms.The empirical evidence indicates that auditors have adjusted their audit strategy to meet the regulations,risk-based auditing is being achieved to a degree,reasonable and effective corporate governance helps to optimize audit resource allocation,and smaller auditing firms in particular should urgently strengthen their risk-based auditing capability.Overall,our findings imply that the mandatory switch to risk-based auditing has optimized audit effort in China.