The Research on Our Audit Market Concentration of the CPA Profession
|School||Dongbei University of Finance|
|Keywords||Audit Market Concentration Local Accounting Firm "Big Four"|
Our CPA system was re-established in1980, as the product of market economy, the CPA profession has made considerable progress since the reform and opening up, but at the same time, with the exposure of financial fraud of the listed companies such as Qiongminyuan(1997),Hongguang (1997), Lvdadi"(2010), Wanfushengke(2013) etc. the involvement of the certified public accountants reveals serious defects of CPA profession:the non-standard auditing practice, the poor quality of audit, the lack of professional ethics, and so on, which lead to trust crisis to the domestic firms. Meanwhile the "Big four" occupied the market rapidly with rich professional experience, good brand image and "super national treatment".they won the auditing and consulting business of most large domestic enterprises, in2012the campaign of Four big state-owned Banks changing auditors even became the monologue of the international big four. while local firms were only on the sidelines. And outside the industry, along with the deepening of reform and economic globalization, more and more large state-owned enterprises go abroad to explore overseas markets, in this process they need escort of the certified public accountants; On the other hand, a growing number of multinational companies enter Chinese market, causing profound changes to our market economy, which demands certified public accountants play the role of "economic police" to ensure the steady and healthy development of market economy in our country. With the fierce competition and important mission, the local accounting firm as the foundation of China’s CPA industry becomes the focus of public attention.For any industry, product quality is the most important factor, the CPA profession is no exception, but the quality of audit report is difficult to measure directly. After so many researches, the theory is generally accepted that there is positive correlation between market concentration and audit quality, and from the perspective of the development of American certified public accountants industry, the audit industry centralization is truly a sign of maturity, so inspecting our CPA profession from the centralization perspective can give us a clear understanding of the development of the industry.This article first introduces the related concepts of market concentration, selecting the industry concentration ratio (CRn) as a measure, focusing on the theory about correlation of audit market concentration and audit quality, then choosing the top14(including the "Big four") in the CPA profession in China from2008to2012as the sample to measure the size of the market concentration index from the perspective of the firm’s annual auditing revenue, number of clients and number of certified public accountants respectively, then carrying on the descriptive statistical analysis about CR4CR8, CR10(exelusive the "Big four") from longitudinal and transverse direction, finding that the market concentration of the CPA profession in China generally increase year by year. And selecting the non-standard opinion frequency as the alternative indicator of audit quality, analyzing the top10local accounting firms’non-standard opinion frequency, finding that local firm’s audit quality has been improving in the5years, and with the market concentration having the same variation trend, thus it also verifies the positive correlation between market concentration and audit quality.But Comparing with the "Big four", the concentration of audit market is still low; high quality customers are less; Lacking of compound talents; and the competition between local firms is intense, lacking of the large domestic firms against the "Big four". And then the article analyzes the reasons of the gap between the domestic firms and the international big four, on the basis of drawing lessons from the development experience of western firms, the article puts forward countermeasures from two aspects of the government and the industry itself, on the one hand the government should change concept, from the direct administrative intervention to indirect policy support, and put the main focus on the reform of enterprises providing a good environment for the development of the certified public accountants industry; on the other hand the accounting firms should take responsibility, by way of training talents, creating image, optimizing consolidation and cultivating industry expertise, learning from experience to optimize audit market concentration and improve the audit quality in our country.The main innovation point lies in the direct focus on the status of audit market of the CPA profession, the previous scholars paid close attention to the empirical study of the relationship between market concentration and audit quality, concerning less about the overall situation of audit market concentration, and previous studies were mainly before2006. In this paper, we choose the latest five years’data to analyse the development of domestic accounting firms in the perspective of market concentration, drawing lessons from the "Big four", then providing theoretical support for local firms to become bigger and stronger.