Such factors as the trust agent relationship based on resources, the incentive incompatibility, information asymmetry, environmental uncertainty are the main audit requirements while independence and audit cost are the major factors influencing the establishment of agency and selection of audit entity. According to the above theoretical framework, on the one hand, there is a stable and considerable size of demand for the audit agencies of township government on the part of the different administrative departments of township government, institutions directly under the township government, village economic organizations, village economic enterprises, village committee in terms of the selection of audit entity; on the other hand, it is also necessary to establish audit agencies of township government from the perspective of independence and the principle of cost effective.