Institutional Arrangements, Audit Storms and Auditor Independence in China

Abacus, 2016

43 Pages Posted: 1 Sep 2016

See all articles by Jason Zezhong Xiao

Jason Zezhong Xiao

Cardiff Business School, Cardiff University

Suchang Yang

Lanzhou University

Xinmin Zhang

University of International Business and Economics (UIBE) - Business School

Michael Firth

Lingnan University - Department of Finance and Insurance

Date Written: August 1, 2016

Abstract

China has adopted an Executive-dominated government audit system (GAS), which is frequently criticized for lacking independence. Through a questionnaire survey and interviews, we investigate whether and how the reporting/control requirements of the GAS (hereafter, the institutional arrangements) result in a lack of government audit independence in China and how this affects budget supervision by the People’s Congress. We contribute field evidence to support the prediction that an Executive-dominated GAS lacks independence and transparency, which in turn is detrimental to the wider accountability regime. However, the specific level of independence varies according to the types and levels of government audit. Our findings enrich the government audit literature, enhance our understanding of the relationship between institutional arrangements and audit independence in a transition economy, and serve as a call for institutional reform relating to the Chinese GAS.

Keywords: Auditing, Audit Independence, Audit Storms, China, Government Audit, People’s Congress

Suggested Citation

Xiao, Jason Zezhong and Yang, Suchang and Zhang, Xinmin and Firth, Michael, Institutional Arrangements, Audit Storms and Auditor Independence in China (August 1, 2016). Abacus, 2016. Available at SSRN: https://ssrn.com/abstract=2831941

Jason Zezhong Xiao (Contact Author)

Cardiff Business School, Cardiff University ( email )

Aberconway building
Colum Drive
Cardiff, CF10 3EU
United Kingdom

Suchang Yang

Lanzhou University ( email )

222 Tianshui South Road
Chengguan
Lanzhou
China

Xinmin Zhang

University of International Business and Economics (UIBE) - Business School ( email )

Beijing
China

Michael Firth

Lingnan University - Department of Finance and Insurance ( email )

Castle Peak Road
Tuen Mun, New Territories
Hong Kong
China
+852 2616 8160 (Phone)
+852 2466 4751 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
104
rank
253,451
Abstract Views
721
PlumX Metrics