On The Causes Of Audit Risks And Preventive Measures

Abstract] Audit quality is the lifeline of audit work, but in recent years, the problem of accounting information distortion is serious in China. In addition, some units and departments have various means of "anti audit", and the audit environment has become more and more complex, which makes the audit risk increasing. Audit risk has become a problem that the national audit institutions, social audit organizations, internal audit institutions and auditors need to pay attention to and study. This paper tries to analyze the causes of audit risks from both subjective and objective aspects, and proposes how to effectively control and prevent audit risks, so that audit can better serve the national economic development. [Key words] Audit risk Financial statement control International Standards on Auditing No. 25, Materiality and Audit Risk, defines audit risk as: "Audit risk refers to the risk that auditors may provide inappropriate opinions on financial information that is materially misstated." Note to American Auditing Standards No. 47 (SAS47) It is believed that "audit risk is the risk that auditors unintentionally fail to properly correct audit opinions on financial statements containing material misstatement." China's Specific Standards for Independent Auditing No. 9 - Internal Control and Audit Risk The audit risk is defined as: "audit risk refers to the possibility of inappropriate audit publication after the audit of certified public accountants when there are material misstatements or omissions in the accounting statements." Although the scope of the above three definitions is different, the description of the meaning of audit risk is basically the same, that is, audit risk refers to the financial statements that have material misstatements and omissions, After the audit, it is believed that there is no risk of such material misstatement and omission, and the audit opinion is inconsistent with the facts. Therefore, we can think that the audit risk is composed of two aspects: on the one hand, there is a risk of material misstatement and misstatement in the financial statements themselves; on the other hand, after the audit, the auditors said that there is no risk of material misstatement and misstatement in the financial statements. In other words, audit risk is the combination of objective and subjective factors: audit risk=inherent risk × control risk × inspection risk. 1、 Causes of audit risk （1） Objective causes of audit risk 1. The changing legal environment of audit activities Market economy is a legal economy. As an important organizational part of economic life, audit activities are also subject to legal norms and adjustments without exception. While the law gives the audit department rights, it also makes it bear corresponding responsibilities. The expansion of audit responsibility is an important reason for audit risk. The more developed the market economy is, the higher the requirements of the state and society on audit will be. The audit objects will expand from entrusted financial responsibility to operational responsibility and management responsibility; The audit scope extends from accounting records to business activities; The audit function has evolved from economic supervision to economic authentication and economic evaluation based on supervision. The audit responsibility of the auditors extends from checking the correctness of the accounting statements to proving whether the audited business activities have major fraud and whether there are major losses and waste. The more responsibilities the audit bears, the greater the audit risk. 2. The complexity of audit objects increases audit risk At present, China's national economy has witnessed rapid growth, with breakthroughs in reforms in key areas, the introduction of a large number of foreign capital, and the coexistence of various economic elements such as private, joint venture, and individual. The economic business types of various economic organizations are complex, the transaction tools are changeable, and new problems such as contracting, leasing, acquisition, merger, bankruptcy, reorganization, and related party transactions are constantly emerging. The complex audit objects are all or part of the economic activities and carriers of the audited entity. The carrier of economic activities is mainly accounting materials and other relevant materials, which are complex and extensive. The public requires auditors to reveal major errors and frauds, evaluate the enterprise's ability to continue as a going concern, and report whether the enterprise is in compliance with laws and regulations in financial matters. However, the information about this aspect is very uncertain, and the risk of information is also high. It is difficult for auditors to draw conclusions correctly, and the risk is inevitable. In addition, the enterprise's own errors in accounting have also become the reason for the deviation of audit results. 3. Audit risks caused by the implementation of computerized accounting. At present, the units using computerized accounting account for a large proportion of the audited objects. Once the computer program is deliberately tampered with, it will make the accounting information on which auditors rely distorted, thus bringing audit risks to audit supervision. （2） Subjective causes of audit risk 1. Differences in the ability of auditors Auditors should have the business capabilities and professional skills required by the Auditing Standards. The level of professional knowledge, analysis and judgment ability, work experience of auditors, and whether they are objective, fair, realistic, conscientious, responsible, honest, and maintain due professional attention have an important impact on the quality of audit work. In practical work, the ability and experience of auditors have certain limitations. The ability of auditors is relatively limited, which makes the ability of audit to complete tasks difficult to meet all the expectations of the society. Therefore, it is relative, not absolute, that audit can meet social needs. In addition, the auditor's sense of responsibility and professional attention are also different. Audit activity is a kind of service work, and the auditor has the responsibility to plan and review work carefully to find out the errors that may have a significant impact on the financial statements. At the same time, the auditor should use expertise and professional attention in the implementation of audit. It can be seen that the sense of responsibility and professional concern of auditors are crucial to the audit conclusions. However, due to various factors, not everyone can meet the requirements, which will inevitably limit the development of audit work and affect the quality of audit work. 2. The audit method itself implies audit risk First of all, it relies too much on the test of the internal control system of the audited entity. Although the establishment of the internal control system can reduce the errors and disadvantages in economic activities, due to the inherent limitations of the internal control system itself, it cannot avoid all the errors and disadvantages. For example, the original control measures are not applicable in case of unexpected business conditions or special economic businesses; The staff who should have held back each other colluded to cheat; The management personnel abuse their power or have different sense of responsibility, resulting in the failure of the control system; Restricted by cost, the cost of control measures is too high, abandoned by the management authority, etc. All of these will make the control system malfunction, resulting in control risks. In the face of a large number of accounting materials, the statistical sampling method is often used. Although this method can improve the audit efficiency, due to the different methods of obtaining evidence, and the difference between the sample and the overall, the audit results and the objective facts have certain errors, which will also bring audit risks. In addition, the modern audit method adopts the importance audit, emphasizing the balance between audit cost and audit risk, and the audit procedure adopted is based on the prerequisite of allowing certain audit risk. However, when applied specifically to audit affairs, auditors are still not quite sure that the samples taken can represent the whole, and there is always a deviation between subjective conclusions and objective facts. Therefore, audit risk is inevitable. 2、 Effective Ways to Control and Prevent Audit Risks （1） Establish and improve the audit legal environment With the continuous development of the market economy, new problems and new situations continue to emerge, and audit is also facing many new tasks and new topics. In this case, we must improve effective auditing standards and legal systems in order to reasonably define the responsibilities of auditors. We should continue to formulate and improve audit laws and regulations. With strict internal control system, improve audit laws and regulations, strengthen audit quality control, restrict audit behavior, standardize audit operations, avoid arbitrariness in audit, avoid audit risks, and effectively make audit work have laws and regulations to follow. （2） Strengthen internal management of audit institutions and implement overall quality control Improving audit quality is the key to prevent and resolve audit risks. Quality is inversely proportional to risk. The higher the quality, the smaller the risk; On the contrary, the lower the quality, the greater the risk. 1. Strengthen audit quality control. In order to strengthen audit quality management and implement qualified audit, audit organizations must adhere to four principles: first, the principle of standardization, that is, audit work should be carried out in strict accordance with the requirements of audit jurisdiction and audit procedures; The second is the principle of authenticity, that is, on the basis of reviewing the assets and liabilities of the audited unit, the audit evidence materials formed by the auditors must be true and reliable; The third is the principle of legality, that is, the problems verified by audit must be handled and evaluated according to the effective laws and regulations when the problems occur. Attention should be paid to quoting the applicable laws and regulations when audit facts occur. The fourth is the principle of prudence, that is, auditors should adhere to a scientific, rigorous, fair and true work style and attitude in the audit work, maintain a high sense of responsibility, and always establish a sense of risk. 2. Adhere to the principle of independent audit. The principle of independent audit refers to that audit institutions independently exercise their power of audit supervision in accordance with the law and independently carry out audit activities without interference from other administrative organs, social organizations and individuals. （3） Reducing audit risk by adopting risk oriented audit The existing audit risks, sampling audit methods and analytical review methods run through the whole process, and the audit results must have certain risks. The so-called audit sampling refers to a method that auditors select a certain number of samples from the audit population to test and infer the characteristics of the audit population according to the test results when conducting audit. In the process of sampling audit, whether the decision-makers have the ability to design and use sampling plans depends on the professional judgment of auditors. There are many uncertain factors in audit. These uncertainties should be resolved by the auditor's correct judgment. However, it is difficult for auditors to evaluate the sampling results in terms of quality and quantity, and it is difficult to achieve a certain degree of accuracy. Risk oriented audit is a kind of audit mode that comprehensively applies the concept of audit risk to the audit process. It determines whether the audit risk is controlled within the tolerable range through systematic analysis and evaluation of audit risk. It mainly uses the analytical review method to not only evaluate the customer's control risk, but also analyze and evaluate the various factors (subjective and objective) that generate the risk to determine the scope and focus of the substantive test, so that the audit risk is closely linked with the whole audit process and plays a role in reducing the risk. In recent years, risk oriented audit has been widely used in other countries in the world. The reason is that the audit risk is considered from the beginning of the audit preparation stage and controlled at the lowest level, so as to reduce the legal responsibility of auditors and reduce audit risk. （4） Carry out audit on the computer system of the audited entity The audit of the computer system of the audited unit can find out the man-made problematic programs in the computer system of the audited unit, so as to guarantee the authenticity of data and effectively avoid audit risks.