The Incentive of Audit Fees and the Binding Force of Audit Liabilities Guarantee the Self-implementation of Audit System
Compared with government audit, CPAs have much motivation to do their work as they will obtain compensations and returns from the work. Although the return is different from that of general merchandise production and sales, which is perfect equivalent transformation, it does give sufficient motivation to CPAs. Among different professions of the society, CPAs have relatively high payment. With the growth of CPA business and elevation of reputation, the payment can also be raised. Generally speaking, motivations for people to conduct various activities stem from three aspects: passion, command, and interests. Passion works in a rather small group, while command and interests are the motivating factors for large-scale groups. If state audit works upon commanding mechanism, CPA audit mainly depends on interests: while providing monitor services to the capital market, CPAs gain their interests. CPAs mainly gain interests from audit fees and besides this they have non-material interests in the form of professional honor.
Professional honor is associated with social status. The work of CPA is praised by most people in the society because CPA works for public interests and his work has features of public product. The common opinion of the society approves of CPA’s work and gives social status to the profession. This social status also acts as an incentive for CPA and motivates them to work hard.
Systems network of the market regulatory structure is a binding force for CPA. CPA auditing is a kind of horizontal monitoring. The object of his service is extensive, concerning various parties of the society. While state audit is a longitudinal monitoring in which one’s superior but not subordinate or peer should be in the charge of. The binding force of longitudinal monitoring mainly comes from command of the superior, conditions are relatively simple and easy to break through. While the crosswise monitoring of CPA auditing inter-balances with other monitoring mechanisms and is supervised and checked by many forces. If the monitoring is from up to bottom, the problem that who supervises the supervisor always presents. While inter-balance has horizontal checks so there is no need for a hyper-supervisor and the supervisor is under more effective monitoring. In capital markets, CPAs are mainly under the supervision and restraint of the following factors: information-demanding party, legal sanctions and economic indemnity, public monitor, and monitoring of other professional bodies.