This paper empirically examines the impact of organizational transformation of accounting firms on audit quality within the context of the unique institutional environment in China based on the samples of companies listed in Shanghai and Shenzhen Stock Exchange audited by accounting firms with securities qualification. We find that the transformation from limited liability company to the Limited liability partnership contributes to the improvement of audit quality. Further, we find that the audit quality of accounting firms from less market oriented area improves considerably more. Our study has implications for continuously deepening accounting firms organizational transformation as well as bringing about a balanced development of accounting firms in different areas in China.