The Discussion Of Audit Risk Management

Audit Risk Management (ARM) is a general, systematic, and comprehensive administrative method employed to attain the most optimal effectiveness of auditing. ARM plays a significant role in effectively controlling Audit Risk (AR).This paper exams the conception and fundamental requirements of ARM, as well as the way the CPA firms and the CPAs -the subject of ARM carry on ARM. This paper contains five chapters.Chapter 1 provides the current situation of Audit Risk in China and then points out the importance of ARM under this circumstance. Respectively we can know about the conception, development and the current situation of AR, then the conception, necessity and feasibility, and importance of ARM.Chapter 2 presents the fundamental procedures of ARM and the objectives and significance of ARM, with particular emphasis on the fundamental procedures, including identification, estimation, evaluation, and disposition of AR. After we acquaint ourselves with the fundamental procedures and the objectives and significance of ARM, we can get a clear understanding the fundamental requirements of ARM.Chapter 3 deals with how to establish the external environment of ARM. To establish the external environment of ARM is indeed to establish the objective environment of the CPA industry because the objective environment of the CPA industry weighs too much in ARM. Consequently to set up the external environment, the most important thing is to set up favorable environment for the CPA industry, that is, to set up the supervising system and operating system and the law environment as well.Chapter 4 discusses how the CPA firms apply ARM. The methods in detail are as following: make the structural reform; enlarge the scale; regulate strictly the internal quality control; standardize the audit fees; employ the proper audit methods; accept the management of the Risk Management Institution and so on.Chapter 5 continues the discussion of the application of ARM in the place of CPAs. As the executors of audit projects, the CPAs have a deep and overall understanding of AR. And the risk loss of AR influences directly the CPAs. Accordingly, the CPAs care most for the AR and they talk an active part in applying ARM. At present, the CPAs in China remain the phase of precaution the AR. Thus we should enhance the CPAs the awareness of AR, and what's more we should improve the factors of AR to control the AR at the audit process.This paper surveys the conception and fundamental requirements of ARM, as well as the way the CPA firms and the CPAs -the subject of ARM carry on ARM. The results show that the ARM is more effective than the Audit Risk Precaution at the controlling of AR and during the audit practicing process, the CPA firms and CPAs should improve the factors of AR and pay more attention to ARM for the efficiency and effectiveness of AR. The author hopes that this paper can promote somewhat the survey ARM.Bi Yanqin(accounting)Directed by Associate professor Ye Ziyuan...