Risk-based Audit Of The Status Quo In China's Domestic Accounting Firms Use Research And Analysis,

The auditing profession has seen the audit approach evolved from accounting number-based approach to system-based approach and ultimately risk-oriented approach over the years. The risk-oriented audit approach was developed based on robust research by the large international audit firms as well as academia on the auditing methodology since 1990's. The new approach has already been broadly employed at the leading audit firms worldwide.In China, the new auditing guideline issued in February 2006 requires domestic audit firms transition toward a risk-oriented audit approach as well. However, accounting scandals still burst one after another in the countries that have adopted risk-oriented audit approach. Is this related to the auditing methodology or because of other more fundamental factors? How much progress the domestic audit firms are making in implementing risk-oriented audit approach? What's the practitioners' attitude towards the new audit approach?This article is based on a survey of the certified accountants in various audit firms on their views about the risk-oriented audit approach and the status of the implementation in their firms. 30 valid responses are collected. The results are analyzed to uncover the reasons behind the successes and setbacks of the implementation of the new audit approach. Also, the article explores the impact practitioners' attitude exerts on the implementation of the new audit approach. Finally, the author expresses his own view on risk-oriented audit approach, reaches a conclusion on the current state of the new audit approach in China based on survey results, and forecast the future development of the new audit approach in China.