Abstract
Innovation is the first driving force and often coexists with risks. As an important tool of risk control, audit plays an important role in preventing and managing such risks. Based on the relevant data of Chinese A-share non-financial listed companies from 2007 to 2018, this paper explores how auditors respond to the risks caused by enterprise innovation. The results show that when dealing with audit risk, in the study of the relationship between enterprise innovation activities and audit fees, the higher the investment in innovation activities and the expenditure on capitalized research and development, the auditors will significantly increase their fees. Only when dealing with capitalized R&D expenditure are auditors more likely to give non-unqualified audit opinions. In the study of auditor’s risk response attitude, it is found that auditors do not improve the degree of audit effort and audit quality, that is, the pricing strategy of audit response to enterprise innovation activities is only a way of charging risk premium, which leads to the conclusion that auditors do not adopt a positive attitude on the whole. This paper also further analyzes various environments to provide relevant suggestions for the formulation of system and audit supervision of relevant departments, and indirectly verifies the necessity and correctness of the formulation of regulations of CICPA requiring certified public accountants to audit innovative information.
Highlights
Innovation has advantage of improving production efficiency
The results show that when dealing with audit risk, in the study of the relationship between enterprise innovation activities and audit fees, the higher the investment in innovation activities and the expenditure on capitalized research and development, the auditors will significantly increase their fees
This paper proposes Hypothesis 2: H2: Under the same conditions, he investment in corporate innovation activities are higher, the auditors tend to publish more non-standard audit opinions
Summary
[1], Wu Yanbing, 2006 [2]), cultivating core competitiveness, and achieving the long development (Liang Laijun, 2010) [3]. Yang Deming (2017) [11] and Yu Haizong (2018) [12] pointed out that auditors should respond to new business models and new risks brought about by external regulations by increasing audit fees. This paper attempts to study how auditors deal with the risks brought by innovation activities based on behavior and attitude. In order to study this problem, by using the observation data of China’s A-share non-financial listed companies in 2007-2018, the research finds that the more the enterprise’s innovation activities are invested, about the risk response behavior, the higher the auditor’s fees. Further research found that for state-owned enterprises, the relation between investment in innovation activities/capitalization of R&D expenditures and audit fees are stronger significantly. This paper provides an empirical basis for the formulation of relevant departmental systems and audit supervision
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