Research On The Identification And Prevention Of Goodwill Impairment Audit Risk

In 2014,the wave of mergers and acquisitions rose,and a large number of enterprises in the capital market carried out mergers and acquisitions,which can not only improve the competitiveness of enterprises themselves,but also promote the economic development of China.However,the continuous growth of the scale of mergers and acquisitions has also led to a significant increase in the goodwill of the A-share market.By the end of 2021,the total goodwill of the A-share market has reached 1.21 trillion yuan,which contains a great risk of goodwill impairment.In2018,a large number of enterprises "exploded goodwill",and the issue of goodwill impairment has attracted the attention of the capital market.In the same year,China Securities Regulatory Commission issued Accounting Regulatory Risk Prompt No.8-Goodwill Impairment,which required auditors to focus on the risk of major misstatement that may be caused by goodwill impairment.However,because the formation process of goodwill is relatively complex,its impairment test involves many subjective factors,and the professional and technical issues involved in the subsequent measurement of goodwill in the actual operation are very complex,which puts forward higher requirements for the financial knowledge and audit business ability of auditors,thus increasing the difficulty and risk of audit work.This paper focuses on the identification and analysis of goodwill impairment audit risk,and then puts forward corresponding preventive measures to reduce goodwill impairment audit risk,make it at a lower risk level,and improve the quality of audit report.Based on the research results on Audit risk of goodwill impairment at home and abroad,this paper defines the concepts of goodwill impairment and Audit risk.Based on modern risk oriented audit theory,fraud triangle theory,principal-agent theory,and earnings management theory,this paper studies the identification and prevention of Audit risk of reputation impairment of A-share listed companies.First of all,the goodwill and its impairment of listed companies in China are comprehensively analyzed from the overall perspective,and specific industries are discussed in detail.Then,based on the current situation of goodwill impairment audit in China’s A-share market,the Audit risk of goodwill impairment in China is deeply analyzed from a theoretical perspective.Secondly,by combing the goodwill and its impairment of Huawen Group,and combining the audit procedure implemented by Asia Pacific Certified Public Accountants on the goodwill impairment of Huawen Group,identify and analyze the major misstatement risks and inspection risks in the audit process: as for the major misstatement risks,from the financial statement level,the risks are mainly from the internal and external environmental risks of the enterprise and the risk of poor employee stability;From the identification level,Audit risk mainly comes from the unreasonable initial valuation of goodwill,performance commitment and earnings management of management;The inspection risk mainly comes from such factors as CPA’s failure to maintain professional skepticism,lack of professional competence,and patterning of information disclosure of key audit matters.Then,aiming at the goodwill impairment Audit risk generated by the case,this paper proposes a case based prevention strategy.Finally,from the three aspects of the company itself,certified public accountants and external supervision,this paper puts forward preventive measures against the Audit risk of goodwill impairment of listed companies in order to reduce the Audit risk of goodwill impairment to an acceptable level.