ABSTRACT
This paper introduces China’s audit market. First, we briefly describe audit reports, opinions, audit fees and the regulatory environment in China. Second, we discuss some distinctive features of the market that may affect audit quality and audit fees. We find that Chinese audit firms have expanded their size quickly because of regulatory intervention but that their market concentration is still low. Individual auditors pay more attention to their clients and to personal risk. Engagement risk mainly arises from changes of organizational form and punishments by the CSRC. The policy of mandatory rotation has been adopted but may be evaded. Finally, we discuss the research framework and give some directions for future China-related auditing research.
