Research On Audit Risk Of Fair Value Measurement Of Changjiang Securities

With the continuous development of market economy,historical cost measurement method gradually fails to meet the needs of some enterprises in the recognition and measurement of relevant accounting information.The importance of fair value accounting measurement is becoming more widely recognised as it facilitates shareholders to grasp the value and realisability of relevant assets in a timely manner.However,compared to historical cost measurement,fair value measurement is prone to become a tool for corporate surplus management due to its difficulty and complexity of application,resulting in the accuracy of fair value measurement and information disclosure becoming a key concern for auditors.This paper uses literature research and case study methods to analyse the audit risks induced by fair value measurement of CJSC from the perspectives of the audited entity(audit object)and the auditor itself(audit subject)respectively,based on the elaboration of the paths through which fair value affects audit risk,and proposes targeted countermeasure suggestions.The results of this case study indicate that:(1)the analysis based on the fair value impact audit risk path shows that,given the lack of a mature and effective market environment for fair value measurement,coupled with the uncertainty and complexity of fair value measurement itself,fair value may become a surplus management tool for the audited entity,thereby increasing the level of material misstatement risk of the audited entity.From the perspective of the auditee,the "virtual nature" of fair value evidence and the balance between audit economy,audit efficiency and audit effectiveness of the firm result in a non-negligible inspection risk for the firm.The level of material misstatement risk of the audit object and the inspection risk of the audit entity together constitute the fair value audit risk.(2)The analysis of the material misstatement risk based on the audited entity CJSC shows that the surplus management practices in the initial measurement of financial assets and the surplus management practices in the subsequent measurement(impairment)of financial assets adopted by CJSC make ample room for the case company’s surplus management to operate,providing a realistic basis for the material misstatement risk of the audit of CJSC.(3)Based on the analysis of the audit inspection risk of the audit subject CJSC,although CJSC has been aware of the existence of the risk of material misstatement of the audit object and has adopted audit procedures and methods to address it,the virtual nature of audit evidence,the firm’s own cost effect considerations and the existence of difficulties in the fair value audit have led to the inevitable inspection risk of the firm in conducting the fair value audit.(4)To address the fair value audit risk simultaneously by the risk of material misstatement of the audit object and the risk of inspection of the audit subject,the accounting firm needs to strictly perform audit procedures,not to rely excessively on the audit evidence provided by the audited entity,and needs to understand the internal control of the audited entity and test the internal control of the audited entity if necessary.In terms of the use of personnel,consider bringing in personnel with financial and computer backgrounds to optimise the knowledge structure of personnel.Consider introducing expert work when professional issues are encountered during the execution of audit procedures.The above measures can effectively reduce the firm’s inspection risk.This paper is based on the research of fair value audit risk and its countermeasures from two perspectives of audit object and subject,which can provide reference for accounting firms to audit securities companies to measure assets in a fair value way and make suggestions for enterprises to prevent their own fair value audit risk.