Audit Programs and Audit Risk: A Study of Japanese Practice

25 Pages Posted: 28 Aug 2006

See all articles by Hironori Fukukawa

Hironori Fukukawa

Nagasaki University

Theodore J. Mock

University of Southern California; University of California, Riverside

Arnold Wright

Northeastern University - Accounting Group


The current paradigm in audit practice for evidential planning is the Audit Risk Model. However, the notion of relevant risks has broadened with the adoption in recent years of holistic audit approaches encompassing business and process risks and an increased focus on fraud risks. This study examines whether audit planning is 'risk adjusted' using archival data from 235 clients from a well-established audit firm in Japan. We address all four aspects of audit planning (nature, extent, timing and staffing) and examine a wider variety of client risks than prior archival studies in order to reflect the current holistic audit approaches of global auditing firms. The main results indicate that although audit planning is based on the level of and change in assessments of many audit risk variables, the associations between client risks and audit plans are rather modest. In this respect, our findings are consistent with those from prior research. We also find that client risks that comprise business risk and fraud risk affect audit planning to some extent. Finally, we report exploratory results suggesting a substitution effect between audit planning judgments in response to higher client risks such as increasing the extent of validity tests while decreasing the extent of confirmations.

JEL Classification: M49

Suggested Citation

Fukukawa, Hironori and Mock, Theodore J. and Mock, Theodore J. and Wright, Arnold, Audit Programs and Audit Risk: A Study of Japanese Practice. International Journal of Auditing, Vol. 10, No. 1, pp. 41-65, March 2006, Available at SSRN: or

Hironori Fukukawa

Nagasaki University ( email )

4-2-1 Katafuchi
Nagasaki 850-8506

Theodore J. Mock (Contact Author)

University of California, Riverside ( email )

Riverside, CA 92521
United States

University of Southern California ( email )

Los Angeles, CA 90089-0441
United States

Arnold Wright

Northeastern University - Accounting Group ( email )

406 Hayden Hall
United States

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