The Research On Application Of Modern Audit Risk Model Based On The Risk Of Material Misstatement

Since the economic environment is more complex day by day, the enterprise bankruptcy risk and the financial report fraud risk are increasing constantly, the audit risk which CPA faced is growing, Which has proposed the severe challenge for the accounting firm to control the audit risk. At the same time, the traditional audit risk model in practice is confronted with some problems, such as the connotation of inherent risks and control risks overlapping, the problem of management fraud, which accelerates the new model of exploration.The International Audit Assurance Standard Board (IAASB) and Chinese Institution of Certified Public Accountant has determined to describe the traditional audit risk model, namely audit risk= the risk of material misstatement risk×inspection risk. The auditing risk standard has carried on January 1, 2007, but the research is limited to the frame of traditional risk model, guidelines for international and domestic application of the model provides simple content, the lack of systematic quantitative method of the misstatement of the identification, evaluate, reply, therefore, the most urgent question needed to solve is to how to correctly understand and apply the model in the audit practice.First, on the foundation of the former scholars' research, the thesis begins from introducing the basic concept frame of traditional and modern auditing risk model, and compares with disfigurement of the traditional and modern one, and analyzes the superiority of the modern audit risk model. Second, for helping the auditors use the model correctly in working, according to the request of auditing standards, the thesis set up a process for the accounting firms. The process can identify the key areas of risk where possible risks of material misstatement exist, evaluate the level of inspection risk, take the appreciate measures and carry on more substantive procedures. It enables CPA to find effectively operational risks and fraud risks, the audit risk to an acceptable level, improve the efficiency of the audit.