Accounting Firm Risk Management

As the Regulations on Tryring the Civil Lawsuits Caused by Fraudulent Representation in the Securities Market promulgated by the Supreme People's Court on Jan 9th, 2003, civil litigation on stock gets into a new period. It would be an overwhelming trend that lawsuits directed against accounting firms and other intermediaries would increase greatly. The regulations will restrain CPA professional conducts to some extend. More importantly, it would make the risks of accounting firms increasing sharply. It is a key issue to the accounting firms in our country to make efforts to manage and control risks so that they could improve their own risk management ability and reduce the losses caused by the risks as low as possible for a better development opportunity and value creation.View from the accounting firm on the whole, the dissertation regards all the risks as integrity connected with each other and makes a detailed analysis on risk structure and the general-mode risk management.Firstly, on the foundation of discussing the definition of the risk, the dissertation analyses the basic characteristics of risk, the specialty of the accounting firms and the impact on their management. All these analysises lead to the consideration that it is necessary for the accounting firms to manage risk. Secondly, on the basis of analysing the partners' risk expectation and the correlated influential factors, the dissertation summarizes the goal of the accounting firms in risk management, and studies the process of risk management in detail. Thirdly, the dissertation analyses the risks of the accounting firms from three angles of the accounting firms: the demand of audit information, the property rights, the governance structure and audit's professionalism, then concludes the risk structure. Fourthly, the dissertation states the methods of risk measurement and applies these methods to the risk measurement of accounting firms. Finally, the dissertation puts forward the basic principles and elements of the risk management mechanism in accordance with the facts of China nowadays.