Research Of The Strategies For Financial Statements Audit Risk After Undertaking New Clients For An Accounting Firm

To facilitate the accounting firm’s risk management capabilities. CPA issued “public accounting firms’ internal management guide", Which states that firms should follow quality control standards, formulate and implement scientific quality control guidelines, guarantee quality guidelines be implemented, reinforce risk management. The standards of the accounting firm quality control released in 2010 by CPA, which called firms give full consideration of audit risk when accepting and maintaining customer relationship. Accounting firms should refuse to undertake the business or terminate the agreement if it cannot reasonably reduce audit risk. When accounting firms first undertake new customers, compared with the continuous audit clients, less cognition of new customers will increase audit risk. Using revealed companies’ datas for empiricaly test about what risk response measures will be after accepting new customers.The research achievement about how to undertake the risk of new customers is cited. Based on risk management theory and risk-oriented audit theory, and the Shenzhen Stock Exchange and Shanghai Stock Exchange main board market data are selected, and using SPSS statistical analysis tools to test hypotheses:first, accounting firm charge higher audit fees to new customers. Second, accounting firms do not assign more experienced auditors in the first time to undertake a business. Then, after the publish of audit penalty, firms tend to issue a modified audit opinion. These results indicate that firms mainly through increasing audit fees and issue modified audit opinion to dominate audit risk after accepting new business. Firms do not take advantage of human capital to assign more experienced auditors and enhance professional competence. It also reflects firms are more inclined to transfer risk to the clients to avoid risks. On the purpose of reducing audit failures after the loss, they increase audit fees to receive a higher risk premium. Firms issue modified audit opinion to reduce the risk of litigation and maintain firms reputation.Based on the analysis results, carefully choose the customer and assign experienced auditors, strengthen risk management of firms are adviced. This thesis research on whether accounting firms assign the auditor with industry experience for the new customer, and the innovation of this thesis is the measurement of experienced auditors by the number of companies in an industry which are audited by the auditor.