The Effects of Organization Size on Internal Control Informatization on Principal-Agent Relationships among Certified Auditing Firms in Beijing
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Abstract
This study examines the moderating roles of organizational size and principal-agent relationships in the impact of internal control on audit quality, using auditing firms in Beijing as a case study. It also evaluates the influence of internal control, informatization, and audit quality on overall audit performance. Three study objectives are proposed: 1) to examine how principal-agent relationships moderate the relationship between internal control and audit quality; 2) to investigate the moderating effect of organizational size on the relationship between informatization, quality of auditors, and internal control; 3) to evaluate the effects of internal control, quality of auditors, and informatization processes on audit quality in certified auditing. The sample comprises auditing firms registered in Beijing, with 40 firms selected through random sampling. A total of 534 valid questionnaires were collected online via the "Questionnaire Star" platform. The study adopts a quantitative analysis approach, utilizing SPSS and AMOS to perform Structural Equation Modeling and hierarchical regression analysis on the data, thereby validating the theoretical framework and hypotheses. The findings reveal that both organizational size and principal-agent relationships moderate the effect of internal control on audit quality, and they confirm the positive impact of auditor quality, informatization, and internal control on audit quality. The study suggests that auditing firms can enhance audit quality by providing additional training to improve the quality of auditors, selectively investing in informatization according to their specific circumstances, and improving agency relationships and internal control. These findings provide valuable empirical support and management recommendations for auditing firms aiming to enhance audit quality.
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