감사인지정제도와 지정사유별 기업의 전략적 회계선택

[Purpose] Mandatory Auditor Designation was implemented to ensure the professionalism of the auditors. After the existing Free Audit Engagement System was considered to hurt each auditor’s independence, a new system was created in 1990 to increase accounting transparency and to protect accounting information users. However, only very few external auditing firms use Mandatory Auditor Designation, for a maximum of only three years. Therefore, it is questionable whether the system is truly useful as a preliminary regulation device that increases accounting quality. This research observed companies that received auditor designation as a result of becoming a listed corporation (IPO) compared to those that received auditor designation due to point out of Supervision. Using these samples, the research will compare how the accounting quality changed during and after auditor designation. Furthermore, whether or not the designated auditors will be brought back as consecutive auditors during the first year of Free Audit Engagement System following mandatory auditor designation, and the change in accounting quality that follows. [Methodology] An empirical analysis was conducted on companies listed on the KOSPI and KOSDAQ markets from 2006 to 2016. Accounting quality is determined by the discretionary accruals measured by the Jones Model (Dechow et al., 1995), and the analysis is as follows： [Findings] First, for corporations that received a mandatory auditor due to IPO saw a decrease in discretionary accruals between 2nd and 3rd year after auditor designation ended. This is caused by the designated auditor not being able to stop the manager raising the issue price of stocks in a public offering to increase profits, and the auditor by free audit engagement system following the auditor from auditor designation carrying out a conservative audit due to the increased audit risks from the said action by the managers. Second, the difference in accounting quality of when the designated auditors are brought back as consecutive auditors during the first year of Free Audit Engagement System following mandatory auditor designation and cases where they were not were analysed. In the case of the former, the amount of discretionary accruals remained unchanged after the auditor designation ended. On the contrary, the latter showed a higher discretionary accrual between the second and third year following end of auditor designation. This can be extrapolated to show that auditor by free audit engagement has a higher independence than existing designated auditors that are brought back as consecutive auditors. Third, cases in which auditor designation was received as a result of point out of Supervision was analysed. The discretionary accrual had no difference after the system ended. This is due to the agreement between the manager and auditors who are wishing to maintain the accounting quality due to increased audit risks. Lastly, discretionary accruals remained unchanged when designated auditors became consecutive auditors in point out of Supervision samples. [Implications] In conclusion, whether or not the mandatory auditor designation is a functioning regulation device depends on the reason of auditor designation. Therefore, legal changes of mandatory auditor designation or revisions to general environment must be specified per each reason of auditor designation. Moreover, periodic mandatory auditor designation, that is expected to be implemented in the near future, must be implemented with the understanding that consequences will differ depending on the reason for auditor designation.