Judul

AUDITOR’S RESPONSIBILITY AND INDEPENDENCE: EVIDENCE FROM CHINA

This study has empirically investigated the issue of auditor’s responsibility and independence in the social and economic contexts in China. The results demonstrate that Chinese audit beneficiaries and auditors agree that, in general, the independent audit function could enhance the reliability of financial statements and play a positive role in the Chinese economy. Most respondents were supportive of extending public accounting services to all types of business entities. This implies that public accounting has a great potential to grow in China. The support of xpanding public accounting services by various interested groups could be interpreted as the demand for a further deregulation of business administration. Hence, promotion of independent auditing should contribute positively to the growth of a market-oriented economy in China.

This study found that there is an “expectation gap” with respect to audit objectives, auditor’s obligation to detect frauds and third-party liability of auditors. The different perceptions among Chinese audit beneficiaries and auditors could be attributed to the unique institutional settings in China. In an economy dominated by state ownership and government controls, the auditing function is subject to government intervention, and is mainly engaged for “compliance audits.” The emerging “expectation gap” signifies that Chinese public accountants now prefer to limit their responsibility for fraud detection by adopting the professional line prevailing in Western countries. This may be a necessary step for the growth of public accounting in China with respect to a breakaway from the traditional role in governmental business administration. Nonetheless the Chinese auditing profession must contemplate how to reconcile its self-interest and the public needs for credible auditing services. It is argued that the “expectation gap” in China is mainly derived from the varied...