Treatment Of Intangible Assets Based On A False Financial Report Audit

The false financial report would cause the profit diversion between the different interest parts, be harmful to the resources disposition function of the stock market, and destroy the long-term and continuous development for our money market and national economy. In knowledge economy era, the listed company have been using intangible asset to manipulate its earnings and providing the false financial report, therefore, this article studies the intangible assets audit in order to govern the fraud financial statements.Firstly, the article analyses the related theories, including the financial report quality control theory, the value creation and measure theory of intangible asset, and the theory of surveillance function for independent audit. Based on these analysis, the article takes the listed firm's yearly financial statements of medical industry from 1999 to 2004 as samples, analyses statistically the configuration and information exposure of intangible assets. The result indicated that there are obvious differences between special-treatment corporations and usual corporations about the intangible assets, special-treatment corporations has changed its intangible assets unsteadily and has an information exposure with many problems. For confirming further this statistical result and inspecting the relevance of the audit of intangible assets and the financial report quality, the article analyzed the behavior of two listed firms in the shock market. The conclusion indicates that some listed firms in China are using intangible assets to manage their earnings in order to adjust their net profit and influence some indexes that is correlative with net profit, while the audit for intangible asset by CPA could not expose effectively this kind of behavior and guarantee the information quality requirement of intangible asset. In view of the fact, the article constructs an systematic audit theory frame for intangible assets , whose aim is to help the audit practice of intangible assets, and govern the fraud financial statements.