The Research To The Influential Factors On Material Misstatement Risk Of Financial Statements Based On SEM

Since entering the twenty?first Century, the rapidly developing social economy and more and more complex business as well as the frequently occurred audit failure cases at home and abroad result a crisis of confidence in the public to the CPA. Under the risk oriented audit model, the identification, assessment and response of material misstatement risks is the key to reduce the audit risk. And the way to assess material misstatement risks is not quantitative but qualitative. This paper analyzes the formation mechanism of the risk factors, in the basis of the identification on the factors of the material misstatement risks of financial statements, and then carry on the positive research,in order to provide a useful reference for the risk oriented audit theory and the CPA auditing practice.In this paper, the study object is the material misstatement risks of financial statements. It also points out the research background during current stage as well as the theoretical and practical significance. Based on the research status at home and abroad,the limitations of existing research are pointed out. This paper helps to clear the connotation and the position of the material misstatement risks in the modern risk oriented audit based on the development process of the modern risk oriented audit and the basis of related disciplines. On the basis of the existing research, this paper analyzes the potential factors of material misstatement risks from 8 dimensions including the macro environment, industry and regulatory, corporate strategy, risk management, internal governance, accounting policy, financial distress and performance pressure. Through analyzing the formation mechanism of material misstatement risks, this paper puts forward the conduction mechanism on factors of material misstatement risks. The paper puts forward the risk of material misstatement path hypotheses and constructs the corresponding structure model, combined with the method of SEM, using SPSS17.0 and AMOS7.0 to deal with returned questionnaires for empirical research. Then, it draws the overall ranking of the influencing factors on risk consequences:internal control>accounting policy>performance evaluation>industry and regulation>financial distress>corporate strategy>business risk>macro economy. This paper uses a financial statements audit case to identify, assess and response the risk respectively from the angle of 8 risk factors. Finally,this paper makes a summary and outlook.