Research On Material Misstatement Risk Assessment Of Liquor Listed Companies Based On AHP-FCE

In the 1990 s,large international accounting firms began to explore a new auditing method--modern risk-oriented auditing by using strategic management theory.It was believed that the auditing risk came from the misstatement risk of financial statements,while the misstatement risk of financial statements came from the strategic risk and operational risk of enterprises.With the wide recognition of modern risk-oriented auditing,the International Auditing and Assurance Standards Board(IAASB)has made a significant revision to the Audit Risk Standards,refactoring the audit risk model into audit risk = material misstatement risk × detection risk.The new audit standards require certified public accountants to take appropriate audit procedures to reduce the audit risk to an acceptable low level after assessing the material misstatement risk of the audited entity.Therefore,assessing the risk of material misstatement of the audited entity is the top priority of the audit work.At present,scholars have used various qualitative or quantitative risk assessment methods to assess the risk of material misstatement,and the combination of analytic hierarchy process(AHP)and fuzzy comprehensive evaluation(FCE)is a kind of qualitative and quantitative evaluation method,combined with the advantages of two kinds of methods.Therefore,this paper chooses to use AHP and FCE to conduct risk assessment of material misstatement.Considering that different industries have different business activities and risk characteristics,factors to be considered in the assessment of material misstatement risk are also necessarily different.However,existing studies have not differentiated the industries of the audited entity.Therefore,it is necessary to build a material misstatement risk assessment system for specific industries.This paper conducts research on the liquor industry,and analyzes the factors affecting the risk of material misstatement of listed companies in the liquor industry according to the characteristics of the business activities of these companies.Based on this,a material misstatement risk assessment system for liquor listed company is constructed.AHP is used to determine the weight of each indicator in the material misstatement risk assessment system.Combined with the actual case of WULIANGYE YIBIN CO.,LTD.,FCE was used to evaluate the risk of material misstatement to verify the applicability of the assessment system.This paper is divided into five parts.The first part introduces the background and significance of this study,then introduces the literature related to the risk of material misstatement,and then describes the research methods,content and framework of this paper,and finally explains the anticipated contributions and shortcomings of this paper.The second part briefly introduces the concept of audit risk and material misstatement risk,introduce current methods for risk assessment of material misstatement,analyzes the reasons for selecting AHP and FCE to assess the risk of material misstatement,illustrates the applicability of AHP and FCE,and finally introduces the theoretical basis of this paper.The third part explains the design basis of the material misstatement risk assessment system,analyzes the factors affecting the risk of material misstatement of the liquor industry listed companies at the financial statement level and assertion level in according to the characteristics of these companies,proposes an assessment system for the risk of material misstatement of these companies,and uses AHP to determine the relative weight of each indicator.In the fourth part,WULIANGYE YIBIN CO.,LTD.is taken as an example to analyze its material misstatement risk,and apply FCE to evaluate its material misstatement risk.Finally,measures to deal with the material misstatement risk are given from the two aspects of financial statement level and assertion level.The fifth part summarizes the research of this paper and gives relevant suggestions for applying the method of this paper to the practical circles.