Research On Modern Risk-oriented Merger&Acquisition Auditing Risk

Merger and Acquisition are transactions targeted at business control, which play an important role in Synergy Effects, market forces, risk reducing and good-quality assets. However, Merger and Acquisition transactions are not plain sailing, which are always filled with a variety of risks. The presence of risks affects the success of Merger and Acquisition. As a result, screening and preventing the risk in the Merger and Acquisition process becomes a very important question. At this time, Merger and Acquisition auditing work is extremely important,which can prevent and decrease the audit risk.With the prosperity and development of the Merger and Acquisition transactions, Merger&Acquisition auditing services becomes more and more. However, there are few literatures on Merger and Acquisition auditing risk. Compared with the research of auditing risk theories and the general auditing, the research literature on Merger and Acquisition auditing is not only less and less in-depth, but also no perfect theoretical analysis framework.In all, the theoretical research is lagging behind the development of the Merger and Acquisition auditing business, furthermore, the theoretical research cannot do the effective guidance on the Merger and Acquisition auditing service. In view of this, this paper would do some research on the Merger and Acquisition auditing from the perspective of the CPA auditing, using the Merger and Acquisition theory, auditing risk theory, principal-agent theory and game theory, in order to analyze and reveal the various aspects of auditing risk and advances the corresponding strategies.Firstly, this paper summed up the specialist of the Merger and Acquisition auditing from its generality, combined with the characteristics of Merger and Acquisition transactions. The specialist of the Merger and Acquisition auditing includes the auditing objective, auditing relationship and the auditing report. As a special auditing services, Merger and Acquisition auditing has the higher risk due to the risk of the Merger&Acquisition transactions. From the perspective of information economics, it is the information asymmetry prevalent in the process of mergers and acquisitions that cause the high risk of the Merger&Acquisition auditing. In the meantime, the different pursuit of the interests among the various participating bodies easily cause the conflict of interests, which no doubt would bring the threat on the auditing dependence, and therefore increasing the auditing risk.Secondly, this paper build the Merger and Acquisition audit risk, regarding the specialist of the Merger and Acquisition, with the theory of the modern risk auditing standards. The contents of the model includes:various kinds of the Merger and Acquisition audit transactions, basing on the different periods of the Merger and Acquisition, the stakeholders and focusing on the auditing risk preventing.Thirdly, this paper compared the distribution and influencing effect of the risks of significant misstatements of Merger and Acquisition between the general FS audit and Merger and Acquisition audit. The main methods of the comparing research are analytic hierarchy process and fuzzy evaluation method. The results showed that:it is quite different on the significance level of the influencing factors on the significant misstatements between the general Financial Statement audit and Merger and Acquisition audit. On the distribution of the significant misstatements of Merger and Acquisition, long-term equity investment, intangible assets, goodwill, taxes payablevable, accrued payrolletie, accrued liabilities, non-operating incometionsare all belonging first level of important accounts of the risks of material misstatement.Finally, this paper draws the following policy suggestions to the prevention and the controlling of the Merger and Acquisition audit risk, based on the theoretical and empirical research from two perspective:the accounting firms and the industry executives.The suggestions including as the following:introducing the limited partner system in Merger and Acquisition audit; improving the internal controlling system of the accounting firms; improving the quality of the accounting firms and the auditors; Corresponding operational guidance should be introduced to the Merger and Acquisition by Chinese Institute of Certified Public Accountants.