A Case Study On Audit Risk Under Valuation Adjustment Mechanism Of Yabaite Technology Co.,Ltd

As a means for listed companies to enhance the confidence of small and medium-sized investors and protect their interests in the process of Merger& Acquisition,Valuation Adjustment Mechanism(VAM)will undoubtedly improve the stability and efficiency of the entire financing process.But high VAMs often mean that corporate's management is more motivated to make financial fraud.For CPAs,the increased motivation for management financial fraud means that the CPA's audit risk increases.If the CPA does not take corresponding measures to deal with the risk of financial fraud,this may lead to audit failure.And 2019 is a year in which the VAMs are concentrated.At that time,when the CPA audits the listed company's financial report,how to evaluate the audit risk under the VAM will be their main concern.This paper takes Yabaite's VAM as the starting point.Firstly,it analyzes the formation mechanism of audit risk under VAM.It points out that the audit risk under VAM is caused by indirect reasons.When the audited entity has high VAMs,high VAMs often result in financial fraud incentives for management,which in turn leads to increased audit risk for the audited entity.Under this mechanism,the background of Yabaite's VAM is analyzed from the perspectives of operating income forecast and operating cost forecast.Then,according to the GONE theory,the system analyzes the financial fraud motivation under the VAM of Yabaite.Then,according to the modern risk-oriented auditing theory,the audit risk under Yabaite's VAM is analyzed from the perspectives of financial statement level,assertion level of risk of material misstatement and inspection risk.Finally,from the financial statement level,the assertion level of risk of material misstatement and the inspection risk respectively,the audit risk response suggestions under the VAM are proposed.This paper combines VAM and audit risk.Under the specific circumstances of VAM,this paper analyzes its audit risk,making the research of audit risk more specific and has certain theoretical significance.At the same time,research on the audit risk under the specific perspective of VAM can help improve the audit quality of CPAs in the annual audit of listed companies with VAMs,so that CPAs can target this specific process during the audit.In the case,formulate corresponding audit strategies,adopt more effective audit procedures,reasonably assess the risk of material misstatement and reduce the risk of inspection,and avoid audit failures.