英文论文润色 审计账户在维持代理关系中的重要性
Statutory audit and financial reporting derives from the publicity doctrine argument which agrees that companies must pay the cost of publication of their annual report and financial accounts and other related information as their limited liability (Holgate 1995). However, the considerable increase of the audit price forces smaller firms to exempt from disclosure if the cost exceeds the limited benefit (Keasey et al. 1988). Further, based on the fact that the financial reporting function traditionally is outsourced to the independent accountants and the small companies mainly rely on one external accountant to disclose their statutory financial reports (Holmes and Nicholls 1989), Seow (2001) argued that the close relationship between the independent auditor and small companies could make the auditor always works at the accounts that has been prepared, which brings down assurance benefit. Thus, the exemption of statutory audit could be an alternative or better choice of small companies under the comparison between cost and benefit. In addition, since private companies should legally be required to offer the full accounts to their shareholders, the shareholders are usually unaffected by the decision which is whether publicly disclosure or not (Dedman and Lennox 2009). This evidence to some extent support the feasibility of audit exemption for small private companies.
In the UK, the development of company law is organised by the Department for Business, Innovation and Skills (BIS) and the registration is by Company House (Collis 2010). As the associated agency of BIS, Company House has the responsibility for setting up and dissolving limited companies, detecting and recording firm information based on the Company Act and matched legislation, and publishing such information available (Companies House n.d.). Under UK company law (Company Act 2006), a company is qualified as a small or medium-sized one if it meet the least two thresholds of turnover, balance sheet total (meaning the total of the fixed and current assets) and the average number of employees. According to special provisions in the Company Act 2006 and relevant regulations, a small or medium-sized company can prepare and submit the accounts which disclose less information than large and public companies (Companies House 2010). Collis (2010) states that the abbreviated account option for small and medium-sized firms was included into the Compact Act 1981, which indicates the principle of special disclosure based on size was presented into UK company law. Abbreviated accounts for medium-sized companies require higher disclosure level than small ones. Since the UK followed the EU Fourth Directive which allows small firms in EU member states can execute audit exemption, the very small private UK entities can choose exemption from regular audit for the first time in 1994 (Collis et al. 2004, Collis 2010). From then on, the size criteria of small and medium-sized company have increased significantly; the fresh thresholds of small company are £6.5 million of turnover and £3.26 million total assets (Companies House 2010), which equal to the revised EU maximum level ( €8.8m and €4.4m).
These reforms lead large number of firms to enjoy exemption from certain public disclosure of financial accounting, which is argued to be protection for their proprietary information. A major conflict generated by such exemption arises from users who rely on the audit assurance (Dedman and Kausar 2010). It is argued that there may be downsides to exercising these options in term of credit ratings and cost of debt. Banks are the main financial source for small companies (Cosh and Hughes 2003), and the audited reporting is the key factor in the credit decision (Berry et al. 1993).
Apart from the size of the firm, bankers believe that statutory full accounts are the most important data resource of documentary information since they are more reliable (Berry et al. 1987). On the other hand, according to Sengupta (1998), the level of voluntary disclosure in one firm and its cost of debt exists negative relationship, which proves a company would afford higher cost of debt if it opts withhold information. In the contrary, the earlier research found that banks do not care filing options of private sectors as they do not rely on public disclosure but the detailed financial information directly supplied by private firms at the same intervals (Fama 1985). Particularly, although the audit exemption brought a negative impact on credit ratings and cost of debt to the company, the Companies Acts still retains the provision relating to abbreviated accounts option after several amendments (Collis 2010).
This study will continue the ongoing discussion to examine whether smaller, private firms in the UK which exercise disclosure exemption options, suffer from lower credit ratings and higher debt costs, all else equal, relative to firms which do not exercise exemption options. We set Qui score as the dependent variable and establish a regression model to test the impacts of the explanatory variables as Qui score predictors which include qualified financial data and financial ratios in basic accounts. As a major credit rating measure, Qui score is issued by a UK credit rating agency named Qui Credit Assessment Limited. Qui score is expressed in the numerical scale between 0 and 100 measuring the likelihood of company failure in the year following the date of calculation and the companies are classified into five risk groups based on this rating (Doumpos and Pasiouras 2005). All data for this study are available in Financial Analysis Made Easy (FAME) database of Bureau van Dijk's company, in which private companies qualified for filing abbreviated accounts option are present.
