Research On Application Of Modern Risk-oriented Audit Approach In A Small Accounting Firm

Due to the economic environment has changed rapidly,changes in the economic environment change rapidly,resulting in the modern enterprise’s management environment is complexly increasing.In the face of such accounts audit environment,the traditional auditing methods appeared obviously to be inadequate,then the risk oriented audit emerge as the times require.However,the inherent defects of traditional risk oriented audit model is being exposed constantly in the application,in order to solve the problems from these shortcomings,and also the modern risk oriented audit is proposed and it has been attracted with more and more attention.In January 1st 2007, the new audit standards has carried out fully in the domestic accounting firm,and an important aspect of the new criterion which is a comprehensive introduction of risk oriented audit ideas,identify,evaluate and respond to the risk of material misstatement, therefore,this means that the China’s auditing standards connected fully to the international standards,and also the position of traditional risk oriented audit has lacked of dominant.The modern risk oriented audit is a direction in the process of auditing profession development,and the accounting firm should establish the new concept of practice.Modern risk oriented audit considered that audit risk of enterprise as the main source of business risk,therefore,modern risk oriented auditing mode will make audit risk assessment program forward,the risk of material misstatement of the accounts should be appraised through the enterprise strategy, business risk,the understanding of the audited entity’s internal and external environment,moreover,according to the risk assessment results to develop audit plan in order to implement audit procedure,and then the concept of risk will be throughout a whole audit process.In China,the study of the modern risk oriented audit is mainly focus on the theoretical research,and the application study is still at the initial stage.Although audit standards required that the domestic accounting firms should carried out a modern risk oriented audit in the audit practice,however,the results are dissatisfaction especially small CPA firms.The major customer groups of domestic small and medium-sized accounting firm are small enterprises.For example,the use of the report has a narrow range and audit feeis low,and the audit time also is not enough.It is a worth discussion topic that how to properly use the modern risk oriented audit model to reduce audit risk and audit report issued by the appropriate under the dual pressure of time and the audit fee.Basis on the current researches,this paper introduces the modern risk oriented auditing theory.In order to lay the theoretical foundation for the application of further research,the paper introduces the meaning of modern risk oriented audit,the difference between traditional risk oriented audit and modern risk oriented audit and the audit process.Then from the perspective of a small accounting firm, the paper analyzes the feasibility and necessity of using modern risk oriented audit.Through the analysis of the case of A accounting firm,I find some problems of the using of modern risk oriented auditing in small accounting firms and try to find the reasons.Finally, I will make some suggestions for the small accounting firms to use the modern risk-based audit.