Professor Chen Songcheng: "Flowers and flowers" vs."Letter attack":the consequences of role conflict between signing CPA and shareholder of external consulting company

Time: December 11 (Friday) 10:30-12:00

Location: 103, South part of Wenjiao Building, Liangxaing Campus

Reporter: Professor Chen Song Sheng, Department of Accounting, School of Management and Economics

Brief introduction of the report: When signing the CPA concurrently as a shareholder of the firm’s external consulting company, will the two roles conflict, which will affect the quality of the audit? What are the consequences? The study found that the role conflict of the signed CPA reduces the audit quality. The higher the number, shareholding ratio and amount of the signed CPA investment in external consulting companies, the greater the manipulative accrued profit, audit upward profit and restatement probability of its audit clients. It is further found that the signed CPA has a stronger impact on the audit quality in situations where the role conflict between the firm and the external consulting company is stronger (such as serving as a senior auditor of the AICPA, chairman of an external consulting company, the longer the consulting company is established, and the additional capital investment) when signed CPA faces conflicts of professionalism and limited energy, and tends to reduce the number of customers in the following year and increase CPA changes, and there is a phenomenon of ownership discrimination; various external stakeholders (such as analysts, regulatory authorities, investors) have not pay attention to the role conflict of the signing CPA. This article fills in the gaps in the large sample empirical research on role conflict theory that breaks organizational boundaries; the role of shareholders in external consulting companies considering the location of the organization’s network has enriched the signature CPA characteristics research; currently, only firms in my country are restricted from auditing and auditing for the same client. Under the consulting and special audit supervision environment, it is proposed that only restricting the consulting services to the same audit client is still not enough to improve the audit quality, and provides theoretical and empirical support for disclosing personal information related to the signature CPA role conflict.

Brief introduction of the speaker:

Dean, professor, and doctoral supervisor of the Accounting Department of the School of Management and Economics, Beijing Institute of Technology, with the qualifications of certified public accountants and senior auditors. Research interests focus on auditing, internal control, accounting information systems, etc. Current Vice President of the Branch of Higher Engineering Colleges of the Chinese Accounting Association, Deputy Secretary-General of the Educational Society of the Chinese Auditing Society, Deputy Director of the Standards Committee of the China Association of Internal Auditing, Consultant of the First National Accounting Informatization Standardization Technical Committee of the Ministry of Finance, member of the Information Technology Committee of the Chinese Accounting Society, member of the American Accounting Association, director of the China Accounting Review and China Auditing Review. Presided over three projects of the National Natural Science Foundation of China, one of the National Social Science Fund,a dozen general projects of the Doctoral Fund of the Ministry of Education, the Humanities and Social Sciences Fund of the Ministry of Education, the Key Projects of the National Audit Office, the Ministry of Industry and Information Technology, and the Ministry of Personnel. He was awarded the honorary titles of National Leading Talents in Accounting by the Ministry of Finance and Outstanding Talents in Beijing.

(Organizers: Scientific Research and Academic Exchange Center, School of Management and Economics Branch Committee, Academic and Entrepreneurship Center)