The Study On Modern Risk-oriented Audit Risk Model

A manifest feature of modern risk-oriented audit is the introduction of risk assessmentprocedures. As the business risk always result in material misstatement risk to the financialreports, business risk assessment is necessary for the auditor to identify the materialmisstatement risk more effectively. Furthermore, material misstatement risk is an importantpart of the auditing risk model. The auditing risk model is a useful audit tool to developover responses and further audit procedures. It can help auditor avoid excessive or auditdeficiencies. Therefore, the study tests the effect of business risk on the assessment ofmaterial misstatement risk in the first experiment using experienced auditors as subjectsfrom accountant firms. Then the study tests the effect of material misstatement risk on theinvestment of auditing resources in the second experiment.The conclusions are as follows: First, the higher level of business risk, the higherlever of material misstatement risk. Second, from different aspects of business risk doesnot produce significant differences in the assessment of risk of material misstatement.Third, the higher lever of material misstatement risk at the financial statement level, themore auditing resources will be devoted by auditors. Forth, the higher lever of materialmisstatement risk at assertion level, the more auditing resources also will be devoted byauditors. Last, the effect of material misstatement risk at financial statement level on thedevotion of auditing resources if more significant than material misstatement risk atassertion level.