Study On Problems Relative To Audit Risks Of CPA

Nongovernmental audit has been over 20 years since the CPA system was recovered in our country in 1980s. With the establishment, development and completion of socialist market economy, nongovernmental audit developed continuously and quickly, and the CPA industry has become an important part of the economic control and supervising system of our country. As the third party independent of enterprise proprietor and investor, the CPA shall objectively and fairly judge, verify and conclude the reliability of the financial information provided by the enterprise. However, modern audit is based on the sample audit and only concentrically audits a few of important accounting accounts, which is different from the checkups of entire economic business as detailed audit. Therefore, the auditors shall not ensure the accounting statements audited are entirely correct. The auditors shall be responsible for such result on the condition that the auditors failed to find out the important misreport and non-report on the financial statements of the audited units in auditing, thus to cause losses to the investors due to use of false financial information. Then audit risks come into being. However, the features of the audit activities determine that audit risks are impossible to eliminate and the lawsuits against the CPA office are unavoidable. Especially during the last decades, this problem becomes more obviously with some audit events happening. Not only the domestic CPA offices but international famous CPA companies suffer from lawsuits frequently due to audit risks. It has more practical significance to find out methods to efficiently control and reduce audit risks through study on audit risks. This paper begins with the originate and development of CPA, firstly states the causes, of audit risks, relevant concepts, and three stages of the development of audit method, among which it emphasizes and discusses the modern audit method of risks basic audit. Secondly, this paper analyzes many factors existing in the audit risks. On the basis of the above theoretic research, the second half part of this paper mainly discusses how to control and reduce the audit risks in the audit practices. Therefore, the author of this paper, by concluding and discussing on the audit events in the Chinese Security Market, concludes the main factors causing audit risks. At the end, this paper concludes the whole paper, proposes that the audit risks prevention shall emphasize on the professional ethics and audit qualification of the auditors and the control environment of the audited units.