The difference between account-based audit, system-based audit and risk-oriented audit

Account-based audit, system-based audit and risk-oriented audit are different in nature and significance.

First, the nature is different:

System-based audit is to determine the time, nature and scope of substantive testing through the analysis of internal control system; Risk-oriented audit is to determine the important factors that affect financial statements and check risks through quantitative analysis of inherent risks and control risks, and then determine the nature, time and scope of substantive testing.

Second, the meaning is different:

The key point of system-based audit is to find out the weak points of internal control on the basis of reviewing all links of internal control; Risk-oriented audit is a place where major fraud is found on the basis of internal control.

Traditional mode:

Audit risk is affected by the internal risk factors of the enterprise, such as the conduct and ability of managers, the environment in which the industry is located, the nature of business, items that are prone to misstatement in accounting statements, assets that are prone to loss or misappropriation, and internal control risk factors, etc., account balances or various transactions are misstated, and internal control fails to prevent, discover or correct risks.

In addition, due to the CPA's failure to find the account balance or the risk of misstatement in various transactions, the professional community has rapidly developed an audit risk model, in which audit risk = material misstatement risk × inspection risk.

Refer to the above content: Baidu Encyclopedia-Risk-oriented Audit