The Application Of Audit Risk Model On The Risks Of Material Misstatement

For traditional audit risk model increasingly exposes its shortcomings, the International Auditing and Assurance Standard Committee in the October of 2003 issued and amended the relevant guidelines, and implement a new audit risk model, that is, audit risk= the risks of material misstatement x check risk. China Accountants Association in April of 2006 issued new guideline for Certified Public Accountants to replace the existing auditing standards, formally accepted the audit risk model. The risks of material misstatement in the revised audit risk model covers many factors of enterprises, government and Monitoring departments, and includes all the factors which cause major mistakes in the financial statements. That reflects the tracks and process in the change of international audit environmental and the growing complexity of audit work. Therefore, because of the basic theory and use in audit of the audit risk model based on the Risks of Material Misstatement it is very necessary to research the new audit risk model in China audit circles.This paper analyses the audit procedure's impact for the change of audit model and specific process on the audit risk model on the risks of material misstatement from revealing the background and theoretical basis for the big development of the audit risk model and the full reference on the basis of previous studies. Meanwhile, in order to set out how to use this model for a Certified Public Accountant in the auditing work to achieve the goal of reducing audit risk, this paper describes in detail the audit risks of material misstatement model in practice applications through analyzing a case that an alcohol-based listed company's control the risks of material misstatement. Finally, this paper points out the disadvantages of using the model in the audit work and provides a targeted proposal.The research of audit risk model on the risks of material misstatement is one of core areas. Therefore, this paper is supposed to improve the use of audit risk model on the risks of material misstatement in China and find out the specific means of audit risk model on the risks of material misstatement for China's audit circles by analyzing the audit risks of material misstatement model in audit procedure, so as to improve the quality of our audit work, saving audit resources and improve audit efficiency audit to create conditions.