Case Analysis Of Audit Risk Control In CPA Firms

Since the reform and opening up,China's rapid economic development,and successfully in line with the world,has now entered the era of economic globalization.With the gradual expansion and opening of the capital market,the legal environment of enterprises and the public has undergone great changes,the public's legal awareness has gradually increased,the dependence on private audit institutions is increasing,and the attention paid to the civil audit work has gradually increased.However,the complexity and uncertainty of social and economic activities make it much more difficult to carry out the audit work.From the well-known Enron and WorldCom events to the public questioning of the LeTV incident,the financial problems of many listed companies and the increasingly complex audit environment have brought great risks to the audit services of the firm.This includes not only the risk of material misstatement caused by deliberate fraud,lack of accounting robustness and imperfect internal control system,but also the risk of inspection caused by CPA firms due to the imperfect audit risk control system and the lack of professional competence of auditors.The failure of audit risk control in CPA firms will lead to the failure of audit,which will have a bad impact on the firm itself and the industry as a whole,resulting in a crisis of public trust.Therefore,CPA firms should establish a sound audit risk control system,should identify and evaluate audit risk factors,and use risk control measures for risk avoidance,transfer or reduction,thus reducing the joint and several liability of auditors and CPA firms.H CPA firm is one of the top five local CPA firms in China,in the current competitive industry environment,H CPA firm is in the stage of rapid expansion of the market scale,as in other firms,there is also the problem of ignoring audit risk control due to performance development.Studying the problems existing in the audit risk control of H CPA firm and making corresponding suggestions for improvement in view of the problems will help the CPA firm to develop continuously and healthily.In order to study the audit risk control problem of H CPA firm in audit business process in more depth,this paper selects K Audit project as case analysis.K Project Audit object is a listed company,the audit content is annual report audit,the project is rated by H CPA firm as a high-risk audit project,its auditor configuration,review process and review requirements are in accordance with the highest requirements of H CPA risk control system to implement,so there is a certain representative.Through the analysis of H Accountant's transaction risk control system and audit business process,this paper finds that H CPA firm has the following problems when engaging in K project Audit:(1)Insufficient attention is paid to the risk of Auditor's practice;(2)The risk assessment of the audited unit is not comprehensive;(3)The audit manuscript is formalized;and(4)The professional competence of the project team needs to be improved;(5)The review of Project quality control is not thorough.Further analysis shows that the main causes of the above problems are:(1)The Environment of the audited unit is more complex;(2)The risk-oriented audit mechanism is immature;(3)The audit technology and methods lack of innovation;(4)The training and supervision of auditors is inadequate;and(5)personnel costs do not match the audit workload.If effective measures are not taken to prevent it,the result must be an increase in the risk of K project audit,resulting in audit failure.Based on the problems existing in the audit of K project of H CPA firm,this paper,combined with the reason analysis,thinks that it can be solved from the following aspects: establishing a perfect risk-oriented mechanism,strengthening the screening of customers,implementing the effectiveness of risk assessment procedures,and cultivating the risk-oriented consciousness of all staff,and strengthening the management and training of Auditors,Including independent management,project-specific supervision,and professional skills to enhance personnel capacity;Optimize audit procedures and audit methods,including improving the quality of audit evidence,explore new audit techniques and audit methods;maintain the balance between audit fees and audit costs,strengthen the management of audit fees,and ensure adequate manpower in front and back office;Establish and improve an effective review mechanism,supervise and review personnel to strictly implement the review system,to ensure that the review personnel and the project team information is smooth,to avoid the formalization of the review process.