The Research About Audit Risk Identification Under The Big Data Background

Audit risk runs through the whole process of audit.Audit field focuses on how to correctly identify as well as reduce audit risk to an acceptable lower level.The key to audit risk reduction lies in the effective identification of audit risk.With the arrival of Big Data,the extensive application of information technology has made huge impacts on the scope of audit,audit evidence,audit methods and auditors.The relationship between those effects and audit risk along with ways to effectively identify audit risk by using the relationship has become a hot topic of academia and practice in recent years.In domestic and foreign study,scholars have made many researches on the relative factors that affect audit risk.However,which of these factors can help CPAs to effectively identify audit risk remains to be explored.Therefore,based on the background of Big Data,this paper analyzes factors that affect audit risk from three different angles which are audit subject,audit object and Big Data information.It establishes the audit risk identification model by using these factors in order to explore key factors that affect audit risk identification.Also it puts forward appropriate audit risk identification strategies for these factors.The main contents of this paper are as follows:First,this paper introduces the study background and related theories,explaining theoretical roots of audit risk based on Principal-agent theory and Information asymmetry theory.Also,it analyzes and summarizes some risk identification methods which are commonly used.As a result,the Logistic regression method is selected as an appropriate one in this paper.Second,based on the background of Big Data,this paper analyzes the influence of Big Data on audit environment,audit mode,audit scope,audit evidence,audit method and auditors,discussing characteristics of audit risk from those six perspectives and points out that more non-structural data can be gained with the help of information technology.Those data can add traditional audit risk identification clues,thereby raising the efficiency of audit risk identification working.Third,this paper summarizes relevant factors that affect audit risk identification from three aspects,which are audit subject,audit object and Big Data information.Then it establishes the Logistic model based on those factors.Financial data from 78 companies which were punished by the SFC due to financial fraud from 2010 to 2016,they are chosen as samples for the Logistic model.By analyzing the model,we can find different influences of each factor on audit risk identification.Also,we can find that there are six indices significantly affecting audit risk identification.They are the consistency of audit opinion compared with last period,the largest shareholders' holding proportion,book-to-market ratio,sales revenue increasing rate,the ratio of net cash flow from operating activities and Big Data negative emotions.Finally,it puts forward audit risk identification strategies according to the analysis conclusion from three aspects:audit subject,audit object and Big Data information.The research conclusion has certain theoretical and practical value to accounting firms together with CPAs.So,they can enhance abilities to identify audit risk,to take precautions against audit risk and to control audit risk.