Modern Risk-based Auditing: One Theoretical Structure

In resent years, some accounting firms fall into long time's law litigations, and some of them even closed down because of their clients' accounting frauds. What kind of audit risk is the certified public accountants (CPA) faced? And what is the real reason of audit risk? Professionals in the accounting field turn their eyes to the risk-based audit which rose in the western countries in 1980's.Some argued the risk-based audit should be rethought and even stopped, and others thought it should be generally applied in the audit process. The two kinds of contra views show that we haven't comprehensively known the risk-based audit. Based on the conflict views, we researched the difference of the traditional and modern risk-based audit. We hope our research results will be helpful for our country's audit working and theoretical research.The researches at home and abroad focused on the risk-based audit's historic process, theoretical base and audit means. The audit risk theory is key, which is also the conflict focus when some research associations and professions talk about it. Based on the prevenient research results and the latest results of risk theory and management theory, the paper uses the methods of criterion research, comparative analysis, quantitative analysis and qualitative analysis to introduce the system theory and strategic management theory, and to redesign the definition of risk and audit risk and audit risk model to perfect the shortcomings of the former model.