Does the Disclosure of Critical Audit Matters (CAMs) Alter the Auditors’ Audit Responsibility Awareness? —A Research from the Perspective of Audit Pricing
Does the Disclosure of Critical Audit Matters (CAMs) Alter the Auditors’ Audit Responsibility Awareness? —A Research from the Perspective of Audit Pricing
PAN Keqin
School of Accounting, Henan University of Economics and Law, Zhengzhou 450046, China
Abstract This paper using a quasi-experimental design about Chinese listed firms which carry out the No. 1504 audit standards for Chinese certified public accountants for the first time in 2017 as the research opportunity, using the audit price and its change as the substitute variable for audit responsibility, and using audit opinions as the substitute variable for clients’ risk, probes into the relationship between the change of audit responsibility and the new audit standard’s implementation. Firstly, using the DID (difference-in-difference) method, it finds that the client’s audit opinion is more rigid, then the audit price and its growth is higher after enforcing the new audit standards, but the low-risk clients’ audit price is reduced. Secondly, if the audit opinion for year 2017 becomes more rigid than the audit opinion for year 2016, then the amount of audit price and its growth is bigger, however, the audit risk changes in 2016 compared with 2015 did not lead to significant changes in audit pricing. It states that, the first implementation of the CAMs standard strengthens the auditor’s awareness of audit responsibility for high-risk clients, and the auditor makes risk compensation in advance through risk premium adjustment. Meanwhile, the disclosure of CAMs further reduces the audit responsibility for low-risk clients.
PAN Keqin. Does the Disclosure of Critical Audit Matters (CAMs) Alter the Auditors’ Audit Responsibility Awareness? —A Research from the Perspective of Audit Pricing. Economic Survey, 2020, 37(3): 0108.
2020, Vol. 37 
