A Study On The Response To The Audit Risk Under The Risk-oriented Audit Model

Since 1980s, the audit environment of certified public accountant has greatly changed, the economic environment becomes more and more complex day by day, the risk of both enterprise bankruptcy and the financial report fraud are increasing constantly, which have resulted in the increasing audit risk. At the same time, the fierce competition of the audit service market requires that the accounting firm should enhance audit efficiency, reduce the audit cost and increase the of value audit service. Under this circumstance, the risk-oriented audit approach was developed based on robust research by the large international audit firms as well as academia on the auditing methodology since 1990's. The new approach has already been broadly employed at the leading audit firms worldwide. The most remarkable characteristic of risk-oriented audit is: It bases on analyzing and appraising the audit risk systematically. And taking this as the starting point, it formulates audit strategy and the diverse audit plan which adapts with the enterprise condition, considering the risk passes through to the entire audit process. Auditing-risk is just the core of the relative studies and the "orientation" is the very beginning of ROAM. The correct understanding and applying of the audit risk model and deciding appropriate orientation is the premise in controlling the audit risk and plays an important role in reducing the audit risk.The paper is divided into four parts. The first part one begins with a brief introduction of concepts of"model", "guidance" as well as "audit risk", which have a closely relationship with each other. Then it gives a thorough analysis of these concepts so as to provide a theoretical basis for the other parts. The second part starts from the analysis of the evolution of the different audit risk models, mainly deals with the theory of the evolution of risk-based audit and realistic background. Meanwhile, it also introduces the status of the application of risk-based audit to give an overall perspective of risk-oriented audit. The third part analyses the level of audit risk, examine the elements of the audit risk. And it provides a new orientation for the new approach by analyzing and evaluating the existing audit risk model. The last part, through the case analysis, the paper tries to find problems existed on Chinese audit practice, and gives some suggestions to perfect the risk-based audit model.