The Audit Risk Model And Risk-based Audit Study

By discussing the theoretical concept of audit risk and analyzing thefeatures of and reasons for the audit risk, this thesis first defines the auditrisk as the CPA's professional risk. Then, in chronological sequence, the thesisintroduces change of CPA's audit mode together with the formation and developmentof audit risk model caused by the audit mode mentioned above. After analyzingthe existing system-based auditing mode and pointing out the deficiencies ofthe audit mode as well as audit risk model, the author creatively put forwarda new concept of the "risk" contained in "risk-based" as being originated fromthe business risk-leading material misstatement risk. This clearly and newlydefined concept will better guide the CPAs to practice the audit jobs.Based on the analysis above, the author made an amendment to thetraditional audit risk model and the amended model will surely make a solid basisfor the application in the practice field.To put a case in point, this thesis also introduced an actual financialfraudulent case occurring in one public list corporation, who was expelled fromthe securities market for failing to disclosing its financial statements in time.By analyzing such a true case, we can further find the deficiencies of thesystem-based audit mode when it was use -d to cope with systematicallymanipulated financial fraudulent cases, what's more, it can also help us todeeply understand the usefulness of the risk-based audit mode in solving suchfraudulent cases-elated problems.Finally, this thesis shows us the future vision and possible applicationof the risk-based audit mode in China.