Research On System Of Human-centered Auditing Theory

There is a huge change in the21st century that is reflected to the gradual raise ofthe knowledge-based economy, and deep development of democracy. According tothe development of the modern society, the value of human beings has been fullyconcerned rather than the material. Hence the scientific researches on managementhave paid a significant attention to “human beings”. Unfortunately, existing auditingtheories and practices still normally focus on materialism rather than humanism. Inthis paper, we will illustrate that how to make the human-beings principle into theaudit system and risk analysis, how to build a Human-centered auditing system.This paper mainly applies positive research, combined with normative researchincluding application of case analysis by induction, deduction, comparative analysisand other methods. Furthermore, this paper integrates the latest research results fromthe behavioral science, psychology, anthropology, management science, economicsareas. It is aim to build a new theoretical audit system. The main innovation of thispaper and its conclusions are as follows:First of all, this paper shows the innovative think about the nature of the auditingunder the guidance of human-center. On the basis of analyzing of the defects of thetraditional audit theory, this paper put forward the human-centered auditing refers topeople and their behavior as the center for the fundamental concept of the audit. Thenature of auditing is a social phenomenon, and also are self-evaluation activities forhuman beings. Specifically, according to established standards, auditors evaluateaudited-objects and the reliability, legality and validity of their behavior, and thendetermine the fiduciary responsibility, finally provide the suggestion of theimprovement. Human-centered auditing is more likely to consider the significanteffect of motive and process of peoples’ behavior to economic activities, and moreemphasis on the relationship between “people-things/objects”. Hence we cananalysis the fulfillment of fiduciary duty, and thus grasp of the essence of the auditaccurately.Secondly, this paper build a logical starting point for the human-centeredtheoretical auditing system, enrich and develop the system of auditing theory. Thistheoretical system includes the fundamental theory and application theory. Thefundamental part consists of nature of auditing, assumptions, objectives and concepts.Assumptions are established under the human-centered auditing theory at leastincluding as follow: Trustee economic responsibility relationship, all economicactivities stemming from their behavior, problem liability and the confirmation ofpeople’s behavior, and people’s behavior can be improved by auditing. According tothe nature and assumptions of human-centered auditing, the main purpose includesforensics, evaluating their behavior, reliability, legality, validity; analyzing the shortcomings of their behavior, suggesting improvements about people’s behavior,and then promoting the added value of the people and their behavior. Additionally, theauditing concepts includes core concepts and derived concepts which core conceptsconsist of independence, professional care, competence, behavioral responsibility,behavioral risk, behavioral evidence, standards of conduct, behavior opinions; derivedconcept includes communication, professional judgment, a key figure in the type ofbehavior, types of behavior, motivation, importance, responsibility and improvementof behavior. Furthermore, the application theory is based on the theory of the basictheoretical principles to audit practices. According to types of behavior, it can bedivided into acts reliability audit theory and behavior the legitimacy audit theory,behavioral effectiveness of audit theory; according to the principal of auditing, thereincludes the human-centered of the National Audit applied theory, the theory of thecivil audit application, the internal audit applied theory; by operations of auditing, itcould be divided into human-centered auditing standards, the auditing procedures andmethods of the theory and the theory of auditing reports.Thirdly, this paper designs the people’s behavioral guidance for the model ofhuman-centered auditing. Under the guidance of the theoretical auditing system, thehuman-centered model changes from the traditional auditing system: such as ledges,statements, internal controls, and enterprise risk-centric audit mode, to thehuman-centered model. There are numbers of innovations and changes in this newmodel. In particular, this auditing risk model modify the equation “audit risk=risk ofmaterial misstatement×detection risk” to “audit risk=behavioral risk×detectionrisk”. By motivation, this model can be divided into two categories: positivebehaviors, negative behaviors. Additionally, negative behavior can also be dividedinto three categories: fraud, illegal acts, invalid loss behavior and the risk assessmentto determine the focus of auditing. This mode changes the risk-oriented auditingmodel "top-down" and "bottom-up" to “inside-outside” and “outside to inside”. Thismodel adds steps of questionnaire, inspection, observation, interviews, psychologicalevaluation and simulation, and360-degree assessment techniques and methods toenrich the auditing techniques and methods. The suggestion for auditing reportingfrom this new model is aim to report the significant information from human beingsand their actions. Auditors should provide recommendations to improve behavior.Finally, in this research paper, two cases are used to verify and analyze thehuman-centered auditing theory. Comparing with material–centered auditing inauditing practices, it has been demonstrated that the operation of auditing model has aqualitative change under the human-centered auditing, and there is a variety of newauditing methodologies operated. This theory can be utilized to enhance auditingeffectiveness significantly. Consequently, there is an inevitable tendency that thehuman-centered auditing model will replace the material-centered auditing.