On the CPA industry audit risk and prevention and control of a number of issues

Abstract: The Function of Certified Public Accountants and the characteristics of the industry led to the "audit risk" hidden objective, the Article points off the lead to "audit risk" of objective and subjective reasons, but also discussed the prevention and control measures to provide our consciously strengthen the CPA " audit risk, "the prevention and control, so that the rapid development of accounting firms into the track as soon as possible.

Keywords: audit risk, prevention and control.

"Strengthening the audit risk control" is always the survival and development of accounting firms top priority, which is by the CPA profession's own functions, status and characteristics of the decision. To understand that for us consciously to strengthen the audit risk control is necessary because which encompassed the "Know thyself, know yourself," the intelligence.

First, the social difference between the audit and government audit

CPA profession are "independent audit society" category, and the national executive "government audit," compared to the independent audit of the status, functions and features is obvious. There are five points between the two distinctions or different.

First, the "government-run and run." Government audit inspection in the performance of the administrative functions of supervision, often referred to as "Government Audit", and an independent audit by a Certified Public Accountant through the formation of professionals in accounting firms to achieve their "legalization "function, the relative" independence "in the government administration, and therefore called" private. "

Second, the "audit object different." Audit of the targets of the government owned all the administrative functions of government depArtments and relevant national life between agencies, large enterprises and institutions. Independent audit is the object of most businesses, companies, civil society and so on.

Third, "the principal difference." Audit client is a government of the relevant administrative authorities, such as the audit depArtment, financial depArtment, tax depArtment and has the administrative functions of the securities regulatory departments, these departments work in the implementation of audit and supervision of charge. independent audit client is a national law and regulations need to audit by certified public accountants, certified enterprises, companies, commissioned by the two sides must enter into a legally binding "business power of attorney," and specifically commissioned the audit matters and service charges.

Fourth, "the audit objectives are different." Government audit is to prevent the state Public Service malpractice, supervision of government-owned financial accounts of the departments concerned the legality of compliance. The purpose of the independent audit of the normal operation of the market economy is to ensure and promote socio-Economic activities in a fair and reasonable competitive environment, protect the legitimate rights and interests of the investors.

Fifth, "the audit tools and methods different." Government with the mandatory nature of the audit, the audited entity has the responsibility and obligation to cooperate. Independent audit is "you entrusted me services, and fees" based on the <"Enterprise Accounting Standards >> and related accounting systems and accounting methods, according to <"The Independents Auditing Standards>> procedures, methods of financial accounting information provided Beishendanwei, data audit. independent audit from the Government to give the" interference " not accept the company, the company's "means", it should be noted that the independent audit of how the quality, but also accept the Government's supervision and guidance.

Comparison of the Government Audit and the independent audit function, status and characteristics of certified public accountants to straighten out our own position, know what, it should be how to do it, in order to achieve consciously strengthen the control of audit risk, to protect their industries as well as reputation.

Second, the audit risk of subjective and objective factors

The so-called "audit risk", popular talk that the audit error that can not be just and fair audit opinion and leaving CPA firm penalized. A mistake in the CPA industry review, a fraud can ruin an accounting firm , even if it is Arthur Andersen that the firm had hundreds of years old!

CPAs should be aware that "audit risk" come from? And be able to effectively control and prevent. Many years of practice tells us that "audit risk" from the five areas, three of them with "objective" in nature, two with the "human factor." objective risk is the implementation of accounting standards, the deviation caused by the system. accounting standards introduced the "fair value" concept, involving more than a dozen specific fair value accounting standards. that the risk, mainly refers to the fair value of the acquisition is the real objective, fair, or false if there are deviations to hide the "audit risk." practice tells us that companies often fair value of assets, liabilities, costs, profits a great impact even a very small number of enterprises to use is not fair, "fair value" made up profits and hide the cost, and some state tax evasion, fraud and other state-owned assets, audit risk from this one needs special attention. The new guidelines emphasize the accounting elements of the definition and recognition criteria. such as sales revenue recognition, which will contain a lot of "audit risk."

First, this depends on whether sales are related party transactions. The second depends on whether the transactions are fair, equitable, and obviously unfair transactions to the accounting treatment accordingly. The third also at <"Enterprise Accounting Standards No. 14 - Revenue>> About five conditions for revenue recognition to be confirmed. criteria, there are many scientific system is also very sensitive to the provisions, such as "accounting estimate", "or matter", "accounting estimates," "accounting measurement", etc. , the audit process the slightest mistake will lead to "audit risk."

Second, the audit tool itself, there is an objective "audit risk." Independent audit is not so much government auditing "mandatory" means, it is only through the sampling, testing, confirmation and other means to obtain relevant evidence, and be supported with professional judgments. such as "small treasuries", the Government may order the unit to hand over the audit of accounts, if necessary, may require the Bank to assist in providing relevant information, information. CPA not have "ordered" such administrative functions. CPA Audit means a relatively "soft "some important and sensitive financial information can only sampling, testing, confirmation and professional judgments. practice tells us, of which hides a considerable amount of" risk. "listed fraud as the case of Daqing Lianyi (China Securities Regulatory Commission [ 2000] 16 document disclosed that the company fraudulently listing, through the Provincial Economic Restructuring Commission official documents to get approval through the relevant Provincial Industrial and Commercial Bureau to get a business license through the securities sector stocks managed to get a false certificate, and also to get false to the "tax certificate", can be said that a package of fake works. In general, the CPA are based on the audit accordingly difficult for them to get the government authority to carry out "verification" service. The above example shows that the means of independent audit positioning more than a powerless, or inadequate, because of this, "the audit means" hidden objective in itself a lot of "audit risk."

Third, there is a risk audit approach on the objective. Independent audit of the statutory business is financial accounting statements of the "nature" (legitimacy, fairness, consistency, views on the overall manner, the audit report issued by jargon is "eighty-nine not leave ten, "it can not all of the business activities of enterprises bills individually reviewed, but to take sampling, testing, confirmation and investigation methods. These approaches hide the audit risk is obvious. such as stocktaking, said that his client There are hundreds of thousands of fish in reservoirs, is a recognized or certified public accountant to verify? If you want to verify (the actual work is not such a possibility, you can not drain the reservoir and then count the number of fish the water, right? an expert instruction, for example, He saw one at a ranch only one corner of the sheep, how to another ranch where the other end can see only one corner of the sheep, apparently charge customers shipped over the number of fraudulent claims on hand. In practice, CPA often due to meet important financial information such as bank deposits special attention, but the most important information from the confirmation. Practice has proved that circularization is often unreliable. such as bank deposits, money in the account today, and tomorrow will be transferred out of? such as "receivables" that this section is not a real place trading activities? If a customer payment for goods, then it is not involved in related party transactions, or is not a practice to fabricate a profit Collusion? seen from the above, the CPA profession's audit method itself is hidden audit risk.

Fourth, the practice environment of audit risk. From a certain perspective, the practice of environmental risk is the CPA profession one of the largest audit risk. The so-called practice environment, usually with degree of social development. Today's society, when the sediment and turbidity choose the flooding, the small number of enterprises active in the financial fraud, a small number of some power in the executive branch who bribery involved in fraud, which brought even more dangerous to the CPA audit risk. It (China Securities Regulatory Commission [2002] 10 files on the case of punishment Yinguangxia disclosed the situation, the practice environment seriously endangered the healthy development of the CPA profession. disclosure shows that financial fraud Yinguangxia facts are: fake bank notes, forged customs export declaration, false tax documents, forged procurement contracts, false invoicing and so on. Some scholars have written that companies take the initiative to fraud, corruption is the biggest hidden dangers CPA profession!

Fifth, the CPA profession's practitioners from the professional ethics is not enough to bring the audit risk. Most of the CPA profession and practitioners of Certified Public Accountants is good, but there are very few people without professional ethics. Have Research data , in an organization, there is a "vitality curve", the main content is that 20% of the people is good, 70% of people in the middle, only 10% of the people is the worst, to encourage 20% education to save 10%, to 70% better. The study found the Chinese people's view: a place where people have left, and right. The problem is that in the CPA profession that "10%" is a was not a major event, a person, a mistake can ruin a business's accounting firm. than the most typical case of Arthur Andersen down the flag. on the CPA profession, ethical issues have been published online by an expert says, "is the customer one or two years, two years is a friend, three years is a conspiracy." This also shows that if the accounting firm ignore professional ethics, this risk is more terrible from the inside. Lack of professional ethics case led to a lot of audit risk, will not go.

Described by the former, "audit risk" from the five areas at any time threaten our CPA profession's reputation is for an accounting firm, or even between the survival and development. Summarize many years of experience and lessons learned, strengthen risk control a lot of work to do. In order to achieve sound and effective risk prevention, accounting firms should establish a strategic, "with a good team, building team, create a brand!" the guiding ideology. with a good team, building team, a good leader, create brand, and never let up. [Research Papers Download hi138.com]

Third, strengthen the audit risk prevention and control measures

Analysis of the current reform of the CPA profession and development of the situation, I believe that now want to focus on the following four specific work areas, or to strengthen the audit risk prevention and control measures.

(A national accounting firm should do the real spirit of the document 56 Xuedao Shou.

State Office 56 document systematically put forward the reform of China's CPA industry, innovation and scientific development of strategic objectives, but also made the country will take measures to support, encourage and support the rapid development of accounting firms into the track as soon as possible. Paper No. 56, Office of the State noted with great foresight, the accounting firm should be in the "transformation" services should strive to reform to play a role in three areas: First, to improve the quality of Economic information, the second is to guide the rational allocation of resources, optimizing corporate governance structure, Third, maintain the market Economic order and improving Economic efficiency, protect the public interest. and give full play to the role of these three areas are inseparable from the "audit risk" prevention and control. dialectically, only effectively prevent the "audit risk" in order to give full play to the role of the three laid a reliable foundation. carry out and learn the State Office 56 documents, should be the first firm leadership to take the lead and take the lead in the firm on the full course lectures, discussion of their employees. In Based on this Research, to develop accounting firm long-term development plan, special emphasis is to prevent and control the "audit risk" work into the plan, establish and improve the implementation of the prevention and control mechanisms easy to operate. Let all the members of the team clear the common struggle objectives, Xinmingyanliang, which "audit risk control" is of great practical significance. This is because the risk prevention and control by the team all the staff, goes without question.

(B persistent study, Research, <"Enterprise Accounting Standards>>.

"CPA is an accountant's accountant", a good mastery of <"Enterprise Accounting Standards>> is the foothold of the CPA. Otherwise, the" audit risk control, "an empty promise." Criteria "is an integral part of national accounting rules, is professional standards of accounting, capital market "rules of the game." for accounting firms, on the "guidelines" to study, Research should be institutionalized and regular. practice tells us that "guidelines" are constantly revising and improving, Much of the content such as fair value measurement still further exploration. learning "standards" is not a once and for all, but a process of advancing with the times. in the accounting firm, to "case studies, Research" approach to organization staff in the "Guidelines" very good. So leadership Ye Hao, department manager Ye Hao, CPA or whatever, can be used to explain audit case came to power, communication, which prevent the "audit risk" is more practical significance.

(C accounting firm to strengthen its internal controls, development of pragmatic risk control system and approach.

April 26, 2010, the Ministry of Finance jointly issued five departments <"Enterprise Internal Control supporting guidance>>. Wang Jun, vice minister commented," guidelines "to prevent fraud risk and control center to control standards and evaluation criteria as the main body, is a complete system. Although the "Guide" is designed for enterprise development, but accounting firms also have important guiding significance, especially in the "strengthening of audit risk control" issue, it could refer to "guidelines" in the concept of internal control, enrich and improve our "audit risk" control systems and measures to make it more effective. Wang Jun, Vice Minister also noted that the future businesses will hire an accounting firm internal control audit, to test and evaluation effectiveness of internal control. Since we are certified public accountants audit people, then they should be their own internal control more scientific place.

(D party building and business development combined to ensure the development of party building, and promote risk prevention and control.

Paper No. 56, Office of the State emphasized that the need to further strengthen the work of party building industry. Historical experience tells us, "branch on a company basis," Party organizations and Party members play an exemplary vanguard role in fighting force and can tackle tough .2010 years January 29 morning, Xi Jinping inspected the accounting firm Horwath, encouraged by the groups of institutions built in the project, said the party building and business work closely with each other and promote good practice. because "to strengthen the audit Risk control "is the fundamental accounting firm settle down, is the main event, so the firm should be practical to follow up the work of party organizations. branch of the audit risk prevention and control should be established to guide the group, party group assigned to the project to give full play to party organizations fighting force the role of the party building and business combine to complete the project audit mission, prevention and control "audit risk" to provide "political protection" role. in accordance with the State Planning Office 56 document a blueprint for China's CPA industry to enter the fast development track, opportunities and challenges, "the future is bright, the road is tortuous," especially to prevent and control "audit risk" have pragmatic, good job, in place. [Free Paper Download Center hi138.com]