Research On Identification And Assessment Of Material Misstatement Risks Of The Financial Statements

Under modern risk-oriented audit mode, the identification and evaluation of material misstatement risk is an essential step for reducing audit risk and avoiding audit failure. In order to prepare the next step audit plan, certified public accountants need to assess the level of material misstatement risk, which let the auditors easily control the audit risk. Large enterprise basic use the material misstatement risk assessment in practice, however, there are still many small or medium-sized accounting firms exist many problems in the aspect of material misstatement risk assessment. Only improving identify and assess ability, can accounting firm improve audit quality and enhance its ability to control audit risk. Therefore, through case analysis, we can utilize the recognition and evaluation process into the practice, strength its practice and making it more widely used.On the basic of reference literature and summarize practice experience, this paper analysis the necessity of identification and evaluation of material misstatement risk of small and medium-sized accounting firm, and study the method and content of material misstatement risk identification and evaluation: using inquiry, analysis procedures, inspection methods to understand relative risk factors, including industry status, the nature of the audit firm, selection and use of accounting policy, the strategic target, financial performance measurement and evaluation, and the content of the internal control, next discussing the risk assessment methods, mainly including the qualitative method, quantitative method and comprehensive evaluation method.Finally, we chooses H company as an example to demonstrate how to use risk identification and evaluation in detail. The study built the bridge between theory and practice, strengthen the operability, making it a exemplary role.