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What's Wrong with the Current Audit Risk Model?/QU'EST‐CE QUI NE VA PAS DANS LE MODÈLE ACTUEL DE RISQUE DE VÉRIFICATION?

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  • Wally Smieliauskas

Abstract

ABSTRACT This paper identifies a serious risk anomaly between the accounting and auditing literatures. This anomaly has important consequences for the validity of auditor professional judgement in today's rapidly evolving financial reporting environment. These risk consequences were comprehensively surveyed in a recent forum in this journal (2005, vol. 4, no. 2). I refer to these risk consequences as accounting risks. Accounting risks require an expanded concept of misstatements that incorporates forecast errors. The problem with the current audit risk concept is that it does not incorporate accounting risks. This is shown by reference to accounting and auditing standards and other authoritative literature, including empirical research. To remedy this limitation I propose a new risk model that helps integrate the accounting and auditing perspectives on financial reporting into one combined conceptual framework. Such an approach also addresses the problems of integrating into a conceptual framework the new business risk approaches to auditing. RÉSUMÉ L'auteur relève une sérieuse anomalie relative au risque selon qu'il est abordé à travers le prisme de la comptabilité ou celui de la vérification. Cette anomalie a d'importantes répercussions sur la validité du jugement professionnel du vérificateur dans le contexte actuel de l'information financière qui évolue rapidement. Ces répercussions ont fait l'objet d'une étude approfondie dans un récent forum paru dans la présente publication (vol. 4, n0 2). L'auteur assimile ces répercussions au risque comptable, qui fait appel à une extension de la notion d'inexactitude incorporant les erreurs prévisionnelles. La notion actuelle de risque de vérification pose problème, car elle n'englobe pas le risque comptable. C'est ce que révèle la consultation des normes de comptabilité et de vérification, ainsi que d'autres textes faisant autorité, notamment ceux qui sont issus de la recherche empirique. Pour résoudre ce problème, l'auteur propose un nouveau modèle de risque qui facilite la conjugaison des points de vue de la comptabilité et de la vérification sur l'information financière dans un cadre conceptuel mixte. Ce modèle s'attaque également à un autre problème: celui d'insérer dans un cadre conceptuel les nouvelles approches de la vérification tenant compte du risque d'entreprise.

Suggested Citation

  • Wally Smieliauskas, 2007. "What's Wrong with the Current Audit Risk Model?/QU'EST‐CE QUI NE VA PAS DANS LE MODÈLE ACTUEL DE RISQUE DE VÉRIFICATION?," Accounting Perspectives, John Wiley & Sons, vol. 6(4), pages 343-367, November.
    • Handle: RePEc:wly:accper:v:6:y:2007:i:4:p:343-367
    DOI: 10.1506/ap.6.4.1
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    References listed on IDEAS

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    1. Peecher, Mark E. & Schwartz, Rachel & Solomon, Ira, 2007. "It's all about audit quality: Perspectives on strategic-systems auditing," Accounting, Organizations and Society, Elsevier, vol. 32(4-5), pages 463-485.
    2. Ioannis Karatzas & Jaksa Cvitanic, 1999. "On dynamic measures of risk," Finance and Stochastics, Springer, vol. 3(4), pages 451-482.
    3. Mary Barth, 2006. "Including estimates of the future in today's financial statements," BIS Working Papers 208, Bank for International Settlements.
    4. Petroni, K & Beasley, M, 1996. "Errors in accounting estimates and their relation to audit firm type," Journal of Accounting Research, Wiley Blackwell, vol. 34(1), pages 151-171.
    5. Knechel, W. Robert, 2007. "The business risk audit: Origins, obstacles and opportunities," Accounting, Organizations and Society, Elsevier, vol. 32(4-5), pages 383-408.
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