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stand the events, transactions and practices that may have a significant effect on the financial statements or the audit thereof.
Knowledge of the business is used by auditors in, for example, assessing risks of error, in determining the nature, timing and extent of audit procedures and in considering the consistency and reliability of the financial statements as a whole when completing the audit. The auditors’ level of knowledge for an engagement normally includes a general knowledge of the economy and the industry within which the entity operates, and a more particular knowledge of how the entity operates.
This requirement of auditors’ understanding of clients’ business is under the circumstances of the business risk approach which has been widely accepted in today’s audit environment.
Under the business risk approach, the auditors are encouraged to provide the advisory services to clients as the value added dimension. However, the NAS in China hasn’t been well developed. Audit is still the only service provided by the Accountancy companies in most cases. As value added dimension (NAS) requires the broad knowledge of the client’s business, they can promote the effectiveness and efficiency of the audit work. Some audit risks can be avoided by widening auditors’ knowledge of the whole business environment instead of focusing on financial statements. Therefore, NAS should be promoted in the Chinese audit market to guarantee a more efficient and effective audit. 
Secondly, some of Zhongtianqin’s auditors are appointed as the financial consultants by Yinguangxia. However, the current Chinese audit regulation does not give a clear classification of consultancy and audit. Therefore a more clear classification is urgently required to be encoded in current audit regulations. 
After analyzing the cases, let us consider the relationship between audit services and NAS. Is there conflict between them? Do NAS impair the audit independence and audit quality?
The Nature and Characteristics of Auditing:
As Mautz and Sharaf (1985) stated, auditing, unfortunately, does not have any ‘built-in’ characteristics that assure the skeptic of its integrity and independence. However, auditing suffers from what may be described as ‘built-in anti-independence factors.’ Inherent in that nature of public accounting work as now performed are a number of features which to the layman, are almost certain to cast the shadow of suspicion on the auditor’s protests of complete independence.
The close relationship which the profession of public accounting has with business.
Apparent financial dependence
Existence of a confidential relationship
Strong emphasis on service to management
The organization of the profession.
Tendency toward emergence of a limited number of large firms.
Lack of professional solidarity.
Tendency to introduce ‘salesmanship’
‘It is a fact of life in public accounting that fees come from clients, and public accountants are directly dependent on business companies for the greater part of their revenues.’ (see Mautz and Sharaf, 1985, p211)
It is clear to see that auditing itself has the characteristics of dependence on clients, though the aim of its existence is to audit the financial statements independently, in order to provide the financial statements’ users with the accounting credibility. Moreover, the close relationship b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。