Of Certified Public Accountants Audit Risk and Prevention

Summary: accountants should strictly abide by the law enforcement standard, firmly establish the correct concept of risk. Strengthen risk awareness is the key audit risk prevention.

Keywords: Certified Public Accountants, auditing, audit risk

Certified public accountant engaged in legal business from the beginning, the audit risk associated with it. As most of China's current accounting firm has liability company with the scale of small business income, limited risk appetite, coupled with inadequate development of the accounting market, the relevant supporting laws and regulations do not sound the bag, CPA object of audit risk tolerance. the implementation of risk management, audit risk is to prevent the major challenges facing the CPA. I try starting from the meaning of audit risk, analyze its causes, for the prevention of audit risk countermeasures.

First, the basic meaning of audit risk.

On the meaning of audit risk, the International Auditing Standards No. 25 <<of the importance and audit risk>> to audit risk on a regular basis is defined as: "Audit risk is the auditor of financial information on the substance of false positives may provide the risk of inappropriate comments . "<" U.S. auditing standards that>> No. 47, said: "The audit risk, the audit staff with unintentional misstatement of the financial statements of opinion without appropriate amendments to the risk of audit." of "The Independents Audit Guideline No. 9 - internal control and audit risk> to audit risk is defined as: "Audit risk is the financial statements free of material misstatement or omission, and certified public accountants audit the audit opinion issued after the possibility of inappropriate." above three definitions, although the error different definition of the scope of reporting, as defined in International Auditing Standards as the "essence" of the Independent Auditing Standards is defined as "significant", while the U.S. auditing standards defined as "unintentional" conduct, not intentional, but the risk of audit is consistent with the basic meaning of the expression, that is the auditor of audit risk of material misstatement and omission there's financial statements, the audit concluded that the material misstatements and omissions made in writing does not exist with the facts of the risk of audit opinion . audit risk, including the inherent risk, control risk and detection risk. inherent risk is assumed that there is no internal control related to a particular account or transaction type alone or together with other accounts, transaction categories and the possibility of material misstatements and omissions, the control Risk refers to a type of account or transaction alone or together with other accounts, transaction categories and misstatement or omission, but not to prevent or correct the internal control can be the possibility of detection risk refers to a type of account or transaction alone or together with other accounts, transaction categories and free of material misstatement or omission, without the possibility can be found in the substantive test.

Second, CPA causes of audit risk.

Or the object of audit risk and audit or audit-related subject with a third party related to or related to the expansion of the meaning of audit risk, audit risk to make a decision depends not only on the audit client and the auditor's accounting and audit reports, audit third-party relationships (application users and the external environment will also be converted to various factors, including the audit risk factors, directly affect the total risk of audit. This shows that there are different causes of audit risk.

1. Auditors the quality of the result.

Audit the quality of the quality of personnel, including political, moral quality, professional quality, etc. It is a set of audit risk factors. This combination of factors and the audit process, this will be a variable function of audit risk, the higher the quality of auditors, audit the smaller the risk, the greater audit risk and vice versa. well within the firm should pay attention to two aspects: one is the recruitment of professional staff, strict quality always has, can not hire those who do not have the condition. On the other hand , certified public accountants should be noted that the existing continuous follow-up education. in our very complex economic sectors, the new requirements emerging new policy, the audit also is often the object and the content changes, it should develop a system whereby each CPAs have the opportunity to learn new knowledge and continuously improve their operational capacity. Meanwhile, we must also strengthen the rigid constraints of professional ethics.

2. Audit technical limitations.

Modern Auditing the audit highlighted especially in the assessment of the internal control system based on sampling. Sample audit the extent and method adopted is scientific, applied, directly affect the quality of audit work. This according to the overall sample results to infer The results with the actual situation must exist between the large or small differences, leading to possible bias audit findings. [Research Papers Download hi138 \ Com]

3. To be audited accounting information.

Operators to provide true and complete reflection of business performance and financial condition is the duty of the accounting information. But Ruopi management audit unit driven by bad intentions and fraud for the manufacture of "director of cost" and "profit manager." Thus, financial report the possibility of significant errors will increase with a corresponding increase in the inherent risk level, to improve the detection risk, audit procedures to implement CPA caused great difficulties. With the reform and opening up gradually in-depth, state-owned enterprise restructuring various types of economic organizations complex economic and business, contracting, leasing, mergers, acquisitions, bankruptcy, reorganization and other emerging, the type and nature of economic business diversification and complexity, have increased the difficulty of auditing and audit risk . Therefore, auditors should be based on their professional judgments of practical experience, once the judge mistakes, you may have to bear legal responsibility.

4. Auditing the contents of a wide range and complexity.

With the gradual deepening of reform and opening up, state-owned enterprise restructuring, various economic organizations, the complexity of economic business types, contracting, leasing, mergers, acquisitions, bankruptcy and restructuring continue to occur, the type and nature of economic business of the diverse and complex, have increased the difficulty of auditing and audit risk. Therefore, auditors should be based on their professional judgments of practical experience, once the judge mistakes, you may have to bear legal responsibility.

5. Unfair competition, lower prices.

With the dramatic increase in the number of accounting firms, a number of accounting firms by profit-driven, in order to attract business, capture the market, the expense of professional ethics set arbitrarily reduce fees, or even a loss practice, unfair competition in this environment, the audit who work in the field have had to reduce audit procedures to reduce audit costs, which is likely to result in the omission of audit projects, thereby increasing the audit risk.

Third, audit risk prevention measures to be taken.

First, the increase in the audit process and reduce the inherent risk.

When the auditors learned that the audited units operating risks that may exist in respect of the audit planning stage in the formulation of an acceptable level of risk reduction is expected. In the audit risk model, due to the inherent risk and control risk and behavior related to the audited entity and therefore should Select an experienced audit staff to implement effective procedures, and audit process and audit working papers to implement a strict three-tier review system to reduce detection risk, to ensure that the total risk of audit failure to maintain a reasonably low level.

Second, select the customer.

To control and prevent auditors audit risk, effective alternative to deal with customers, customer quality is the risk faced by the CPA is an important factor, careful selection of customers is to prevent the first line of defense against audit risk. To understand the client's moral character . because of the lack of integrity, quality customers, the possibility of providing false accounting information will increase. while also taking measures to understand the customer's history, including the existence of legal proceedings, whether there was a special attempt and so on. If you blindly accept the various audit project, the results must bear a greater cause auditors to audit risk, as well as being unnecessary legal proceedings.

Third, establish risk awareness, strict compliance with practice norms.

Audit risk can be identified, estimated, assessment and control. Although the risk can not accurately predict when and where the audit generation and the possible consequences, but the auditors by the appropriate method can still be within acceptable limits. firmly establish a correct concept of risk, strengthen risk awareness is the key to preventing Dacron audit risk, many domestic and international audit litigation cases tell us that the lack of risk awareness led to the widespread presence of audit risk and potential serious harm, in the course of their practice time to maintain due professional care, strictly according to the audit, earnestly implement the auditing standards to ensure that every aspect of the audit process, the process of each project are the requirements to follow auditing standards, reduce audit risk.

Fourth, the establishment of risk protection mechanism.

In recent years, as China's CPA industry in which great changes in the external environment, CPA audit failure cases is gradually increasing. From the source event in China's Hainan China, Guangxia and something to the Enron scandal shocked the world, all reflect a certified public accountant audit risk worsening the industry. At present, China has established accounting firm extracted risk fund system, but because of firms of varying scale, in the event of litigation arising from financial compensation, you can not afford the amount of compensation relative to the main point, therefore also need to establish audit risk insurance system.

The current audit risk insurance is still in its infancy, only the pilot in individual cities, it should speed up the pace of building the system of audit risk. In short as the market economy, the CPA business to develop, it must be treated with caution audit risk, and timely guard against them. [Free Paper Download Center hi138/Com]