In 1988, the Ministry of Examination determined to lower the exam's passing threshold, which resulted in a large number of qualified CPAs flooding into the audit market. Since then fierce competitions for engagement solicitation has changed Taiwan's public accounting profession drastically. Observing this phenomenon, the authors of this paper try to evaluate the operating efficiency values for the public accounting industry in Taiwan for the period of 1989 to 2002, by applying the Two-Stage Data Envelopment Analysis Method on the annual survey data of the accounting service industry in Taiwan, provided by the Department of Statistics of the Ministry of Finance, R.O.C. In addition, audit quality was also considered while conducting efficiency estimation. Furthermore, this study used the Tobit regression model to explore the determinants of the DEA efficiency scores obtained. The authors find that the overall technical inefficiency of the public accounting industry in Taiwan resulted mainly from scale inefficiency. Most of the efficiency test results did not significantly support the hypothesis that increase of audit service supply imposed a negative effect on the industry's efficiency. On the other hand, the results of Tobit regression analysis pointed out that the efficiency of the industry declined after the exam's passing threshold lowered.