Risks And Countermeasures In Fair Value Auditing

The definition of fair value is one of the great innovations of accounting theory in the end of the 20 th century. In the 21 st century, given the definition of fair value issued by the US financial Accounting Standards Board(FASB) officially, it has been widely recognition and application around the world, and become the new focus point of accounting measurement. The fair value measurement provides a high level of transparency and clarity for most financial instruments and all derivative financial instruments, which is impossible for the traditional historical cost measurement. At the same time, it also brings some new problems for the theory and practice in accounting and auditing, such as the audit risk.The two dimensions of this article is to discuss the challenges brought by the fair value measurement for the audit and where the using of fair value measurement can enlarge the audit risk in the back ground of its application in China. The discussion is based on the using standards of accounting and audit and began with system based on the fair value. Generally speaking, fair value in China is applied more and more widely, and accounting standards and auditing standards also has made great efforts due to help enterprise financial personnel and financial reports auditors with understanding and using of fair value, and overall, accounting principles and auditing standards are both respect of the world view. But, after all, it is not long for the fair value application in China, whether it is for the financial report preparation and disclosure, or auditing the fair value, the experience and ability are both the problems. Therefore, this paper argues that a comprehensive view of the fair value application increased the audit risk, and the procedures and methods which should be taken to response to risk also been asked for the higher requirements. But in the long run, we hold an optimistic attitude to the application of fair value. I believe that along with the continuous development of theory and technology, the fair value measurement will be used with more advantages, and can be effectively prevented and avoided the defect.