The Development Of Audit Risk Assessment System-Based On Fuzzy Theory And Audit Risk Model

The accounting firm must assess the audit risk of the auditee in modern risk-based audit practice. CPA will choose to accept the client whose audit risk is within an acceptable range. However, the accounting firms tends to increase the amount of audit evidence collected for customers with greater audit risk to reduce audit risk, which ensures that the client’s audit risk is within the acceptable range. Therefore, the audit risk assessment plays a crucial role in improving audit quality and reducing the likelihood of audit failures.Quantitative assessment of audit risk is the key technology of risk-oriented audit. Its difficulty lies in audit risk assessment including selecting the various elements of audit risk factors and their weights. There are a lot of fuzzy concepts in this process and it’s hard to quantify.The purpose of this paper is to design an effective audit risk assessment system. This paper is divided into five parts. The first part introduces the research background, theoretical and practical significance of the research and research methods applied. The second part is literature review. First, the risk-based audit content and audit risk characteristics were analyzed. The in-depth understanding of audit risk is an important foundation of this article. Second, with the comparison of seven current major audit risk assessment methodology, this paper choose fuzzy comprehensive evaluation method to assess audit risk. Then, recognize risk factors of audit risk, material misstatement risk and detection risk in literature. The third part is the construction of audit risk evaluation system. Employing the Delphi method to screen the critical risk factors agreed upon by empirical audit to build the audit risk assessment system. Then, in cooperation with the experts compare the indicators pairwise at the same level on the importance of the audit risk assessment system. Use the AHP to calculate the weights of each indicator and complete the construction of the audit risk assessment system. The fourth part of this paper is to use Shanghai Metersbonwe Fashion Co., Ltd. as a case study to describe the practical application of the audit risk assessment system. Start with a brief introduction to Metersbonwe, and then based on the analysis of the macro and micro environment of the company the experts assess the risk level of each index in the audit risk assessment. Then use the fuzzy comprehensive evaluation method to evaluate the expected audit risk of Metersbonwe. Next, the results were analyzed and interpreted. The fifth part is the conclusion, as well as the limitations of the study and the author’s suggestion of the follow-up study.