Material Misstatement Risk And Audit Pricing In Modern Risk-oriented Auditing

Certified Public Accountants 2006 practice guidelines request auditors use the modern risk-oriented audit method. According to this method, the CPA should allocate the audit resources to audit risk so as to raise the input and output effect. Most foreign researches have proved that the risk of inventory, accounts receivables, asset-liability ratio and other indicators have a significant impact on audit pricing, but domestic researches have no clear results. The audit method at home has keep pace with abroad in theory, whether it would have taken in reality? Risk-oriented audit method identify risks and to what extent? Represents the risk of material misstatement indicators whether are reflected in the audit pricing?This dissertation first construct a theory frame about audit pricing on the risk of material misstatement(RMM); Secondly, use binary linear regression model sorting, screening, excluding non-significant risk factors, establish the risk of material misstatement forecasting model(RMMF); Thirdly, hypotheses are tested with the data of Shanghai Stock Exchange from year 2007-2009. Though hypothesis testing and analysis, we can obtain the following conclusions:(1) The conclusions on the identification and assessment of risk of material misstatement: financial risk and going-concern risk is positively related to the risk of material misstatement; the environment risk, industry risk and other aspects of corporate governance risk has not been well reflected, but they indicate that long-term trends are strengthening the risk of material misstatement.(2) The conclusions of the audit pricing on the risk of material misstatement: the composite risk of material misstatement coefficient, the asset-liability ratio and representative indicator of the going-concern risk are positively related to the audit pricing; the profitability irrelevant to the audit pricing. In order to improve the ability of risk recognition and assessment, the CPA should raise the level of their practice, the CPA firms should be specialized according to the features of customers; In order to improve the audit efficiency, the Government should improve on the civil liability of CPA and change the audit pricing model, from regulatory pricing to market pricing.