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en in the commission’ s proposal to the reality that revolutionary changes in the infrastructure of American business have required changes in the way audits are conducted. In our view, the sec missed an opportunity to educate the investing public about such changes.’
Finally, it should be pointed out that some firms that have separated their consulting units from their auditing services have had to rebuild consulting capability within the restructured auditing firms. Having audit support staffs with specialized expertise is critical to audit effectiveness. That expertise, whether for recurring or nonrecurring audit support, often resides with NAS personnel. When faced with the costs, inefficiencies, and quality concerns of outsourcing essential audit support, some firms have elected to rebuild their consulting capabilities.

To conclude, NAS will not compromise audits. By contrast, it can enhance the performance of an audit in some circumstances.

Suggestions and Conclusion
By analyzing the Enron and Zhongtianqin cases, the conclusion is that NAS will not compromise audit independence. Indeed, in some circumstances, NAS can enhance the performance of audit.
In the Zhongtianqin case, two significant problems of Chinese audit are identified. Firstly, the business risk approach has not been widely developed, and therefore the incidence of audit failures caused by the shortage of client’s business knowledge continues to climb. Secondly, there is no regulation defining to what extent the consultant’s relationship with the client are acceptable whilst the auditor can still be identified as independent.
To conclude, some suggestions are given below:
Promote the NAS in Chinese audit market. As illustrated above, NAS will enhance the audit work rather than impair the independence, the promotion of NAS will help to increase the Chinese audits’ quality and enhance the auditors’ performance. Furthermore, as a value added dimension, Provision of NAS will increase the compatibility of Chinese accountancy firms.
Clearer guidelines meanwhile are needed as to classifying what services should be banned and what should not.
Rotations: As the accountancy firms build a close relationship with their clients after a long-term business, the audit independence may be compromised in this context if they lose their objectives. In order to avoid the risk of independence impairment, it is necessary to rotate the auditor every certain number of years.

Enhancement of the regulation. As China has joined the WTO, there is a trend to a regulation convergence with international standards. The regulated market is essential to promote a more healthy and efficient market and thus enhance the confidence of both domestic and foreign investors.

References
Antle, R., Griffen, P. A. Teece, D. J. and Williamson, O. E. (1997), An economic analysis of auditor independence for a multi-client, multi-service public accounting firm. Report prepared for the AICPA by The Law & Economics Consulting Group, Inc. New York, NY: AICPA.
Ashbaugh H., LaFond, R,  and Mayhew, B. W.  (2003), Do non-audit services compromise auditor independence? Further evidence. The Accounting Review 78 (3): 611-639.
Benston, G. J., and Hartgraves, A. L, (2002), Enron:What Happened and What We Can Learn from It, Journal of Account本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。