Application In Practice Of Modern Risk-oriented Audit

Since the beginning of1990s, with the external environment surrounding the companies changing rapidly, more complex business transactions and increasing management fraud have brought more difficulties to auditors. What’s more, the traditional risk-based audit approach could not adapt to the changed audit circumstances, and people become suspicious of the ability of the auditors and the value of audit. Therefore, auditors are faced with higher audit risk. As a result, some large international auditing firms have developed the new audit approach called "the risk-based audit approach". In China, the audit standards issued by the ministry of finance in the year2006indicate that our country has come into the era of modern audit-based audit. But as to the approach of our independent audit, the theory and practice have lagged a lot behind the international advanced level. In order to shorten this gap, the thesis focuses on the origin, theory and application of contemporary risk-based audit approach.At first, we discussed the question why the risk-based audit appears, what’s the process and methodology of the approach, and how it is used in practice of the independent audit. And then, the basic theory and its development and evolution are discussed. We focus on the origin and background of the risk-based audit, and compare the modern and traditional risk-based audit, in light of the characteristics of modern risk-based audit. The process and methodology of the modern risk-based audit is discussed in the second chapter. Since the accuracy of the risk assessment results will directly affect the audit quality, we focus on the risk assessment procedure, which is weak in current auditing practice. Follow the above, an analysis of the foreign classic audit case is discussed.It has explicated the standard risk-based audit process, and the significant sense of the case is also discussed. The problems that may occur during the application of the risk-based audit approach in the Chinese accounting firms are discussed in the fourth chapter. We also analyze the related reasons of the problems, and put forward a lot of useful countermeasures.