Comprehension and evaluation on significant error risk of CPA audit in the information-processing environment

With the development of IT, kinds of information systems and software have been applied in the audited enterprises. That means the audited enterprises have set up their computer-based information-processing environment. In such environment, the uncertainty factors of the certified public accountants (CPA) audit are increasing and the audit risk is enhanced. It is more suitable for the audit risk factors to be described in significant error risk (SER) and detection risk in the information-processing environment. The key of controlling the whole audit risk is to comprehend and evaluate the significant error risk objectively. This essay explains what is the SER and why the SER is the key in controlling CPA audit risk and introduces a quantitative method to help auditors to assess it objectively. Because risk has obviously grey and ambiguous characteristics, it will be helpful for auditors to use the method that involved grey principle components and fuzzy comprehensive evaluation to assess the SER. Only by understanding the risk factors in the information-processing environment of the audited enterprises deeply and evaluating the SER objectively can help auditors reach the audit aims and control the audit risk under an acceptable level.