Audit Risk Research From The Perspective Of Game Theory

As China’s booming market economy,there are more large companies,for the socialist market economy booming on the wings of take-off,are also faced with some problems,in recent years,lots of financial fraud accidents not only damaged the stable development of China’s socialist market economic development,but also proposes a bigger challenge for audit,the audit failure behind has caused the whole problem The industry has caused great soul-searching.Therefore,it is very important to discuss and analyze how to reduce audit risk under the circumstance of limited audit resources.This paper studies the audit risk of R firm on Y listed company,which has certain practical significance to improve audit quality.This paper defines audit risk and its model,and expounds principal-agent theory,information asymmetry theory,rational economic man theory and game theory.This paper introduces the basic situation of Y listed company and R accounting firm,reveals the formation of material misstatement risk of Y listed company and the specific manifestation of R accounting firm’s inspection risk.The paper constructs a game mathematical model to analyze the audit risk behavior of listed companies and accounting firms,adopts different strategies for the management of listed companies and accounting firms,and analyzes the causes of audit risk from accounting firms and listed companies.Imperfect internal control,high proportion of equity pledge risk and strong fraud motivation are the causes of Y listed company forming significant misstatement risk.The inspection risks of R accounting firm are caused by the ineffective implementation of quality control system,failure to observe the warning of independence,failure to uphold professional prudence and excessive trust in old customers.Through game model analysis,it is found that the probability of management and auditor implementing audit risk behavior of listed companies is affected by additional returns and supervision.According to the causes,Y listed company,R accounting firm and regulatory authorities should provide corresponding measures to prevent audit risks.Listed companies should strengthen their own internal control construction and optimize the ownership structure to reduce the risk of material misstatement.By strengthening quality control,maintaining audit independence,enhancing professional ability and increasing the fourth party audit risk control;Regulators apply big data technology to improve supervision efficiency and strengthen supervision over violations to increase punishment costs.In short,as long as there is principal-agent relationship,listed companies and accounting firms will always be in a game,and only by clarifying the game relationship can a new equilibrium be achieved in the game.Accounting firms should focus on long-term development,reduce audit risk,improve audit quality,and strive for survival and development in the game.