The Effect Of Implementing Modern Risk-Based Audit On Audit Fees

On the February 15th, 2006, China's Ministry of Finance issued the Chinese Institute of Certified Public Accountants practice guidelines and put it to practice. The guidelines'promulgation and implementation marked that the modern risk-based audit was established and put to practice in our country. There were significant differences between the Modern Risk-based audit and the Traditional Risk-based audit, for example, the idea of auditing, the audit model and the audit process. The Modern risk-based audit implements a comprehensive theory of strategic management and System Management Theory. It was started from the enterprise's strategic analysis, and through the analysis of "strategic analysis-Analysis of business aspects-the residual risk analysis of financial statements", making the relationship between the fault of the financial statements and corporate strategy closely linked, from the source to find and analysis the material mistake of the financial statements, distincting the material mistake of the financial statements between statements and operational levels, and implementing the audit strategic of a combination of top-down and bottom-up to improve the audit quality and reduce the audit risk. The audit fees was an interaction result of the audit body, the audit object and the audit environment, therefore, auditing system's change was an important affects of the audit charge. What would happen to the audit fees on the initial period of the modern risk-oriented audit implementation?Firstly, we had carried on the theory elaboration and the analysis, including the reasons, the characteristics of the modern risk-oriented audit and it's the main difference with the tradition risk-oriented audit, the audit fees'definition, the major effect factors as well as audits fees of implementing the modern risk-oriented audit in the audit evidence, the audit risk, the auditors, aspect, the auditing routine software influences and so on. Secondly, based on further theoretical analysis's foundation, we proposed that the supposition and collected the year of 2005 and 2006 each 826 listed companies from China's A share market to be used as the sample of audit fees. Through revision the western audit fee model, we set up the parametric test, non-parametric test, descriptive statistical analysis, multiple linear regression, we also made a further research on the relationship of applying modern risk-based audit and the main factors of audit fees'interactive effects through the multiple linear regression analysis. The result is as follows: (1) On the early days of the implementation of modern risk-based audit, the audit fees was a significantly increased; (2) The company size, rate of assets and liabilities, whether be Special treated, and whether be the "the big four" accounting firm, the previous year's audit opinion had a significantly relevance with the audit fees, while the proportion of tradable shares, the proportion of independent directors and whether the change on accounting firms had not a significantly relevance with the audit fees; (3) After the implementation of modern risk-based, the company's size, asset-liability ratio, whether being special treated had a more significantly relevance with the audit fees, while the relationship of "the big four" accounting firms and audit fees was not significantly strengthened. Finally, we put forward several policy proposals according to this article research conclusion.