Research On Recognition Of Earnings Management With Change Of Merger Scope And Audit Countermeasure

With the rapid development of economy,the phenomenon of merger and acquisition between enterprises appeared in the 20 th century,and the consolidated financial statements came into being.The first thing to determine the consolidated financial statements is the scope of the statements.Because the relevant accounting policies and standards can't fully regulate the complicated real situation of Merger and Acquisition,the adjustment of the scope of Merger and Acquisition has become an important means for some enterprises to implement earnings management.Although earnings management is a legal means to maximize benefits,due to the information asymmetry,the deliberately adjusted financial report is likely to cause the users of relevant statements to make wrong judgments and decisions,and as far as enterprises are concerned,excessive earnings management will cause irreparable loopholes in enterprises and eventually lead to fraud,which has a very long-term and heavy impact Big.Therefore,based on the current accounting standards for business enterprises and the frontier research of outstanding scholars,this paper will conduct theoretical and case analysis,use the business process of risk-based audit,study the identification method of earnings management behavior based on the change of consolidation scope and the corresponding audit response measures.This paper adopts the methods of literature research and case study.Firstly,it defines three main concepts of "merger scope","earnings management" and "earnings management with the change of merger scope" in the article,and briefly summarizes the "information asymmetry theory","principal-agent theory","opportunistic behavior theory" and "dance" in the analysis process There are five theoretical bases of "fraud theory" and "risk oriented audit theory".Secondly,this paper carries out theoretical analysis from three aspects: the means of earnings management,the identification methods and the countermeasures.This paper briefly introduces the means of earnings management in the scope of merger of Listed Companies in China.Then,based on the theory of risk oriented audit,it uses two audit processes:understanding the audited unit and its environment,and implementing substantive procedures to establish the audit identification method for this behavior.In the process of understanding the audited unit and its environmental procedures,itcombines the fraud triangle theory In order to identify audit risk points,this paper analyzes the motivation of the company's implementation of this behavior,selects relevant indicators to analyze the financial and non-financial information of listed companies,and identifies whether there is such earnings management behavior,so as to design and establish a set of identification methods for the change of earnings management behavior within the scope of consolidation,and puts forward feasible audit countermeasures for this behavior.Finally,this paper selects Tianjin universal magnetic card Co.,Ltd.which has a long listing period as the research object,and uses the identification method established above to determine whether the changes in the scope of merger in different periods of the company belong to the real earnings management behavior,so as to test the effectiveness of the identification method,and in view of this behavior and awareness of Tianjin universal magnetic card Co.,Ltd For other problems found in the process,specific countermeasures shall be put forward.This paper holds that if the target enterprises in the study have obvious motives of financing and licensing,the interests and rewards of the management are linked to the profits of the enterprises,the attitude of the management is negative,and the audit institutions are often replaced,and the accounting standards are not specifically specified,the information asymmetry cannot be eliminated,and other practical problems,the audited units will have the motivation to implement earnings management,then the audit The accountant should pay attention to the risk of the company's implementation of earnings management of changes in the scope of consolidation.For this risk point,further procedures shall be implemented.If there is incomplete disclosure of consolidation scope,one positive and one negative change of net profit in each year,sharp increase or sharp decrease of return on net assets,significant fluctuation,mismatch between cash flow and change trend of net profit and significantly lower than net profit,frequent change of accounting firms and non-standard audit issued by different accounting firms continuously Based on the comparison and analysis of the changes in the scope of consolidation of the company,it is concluded that if the above indicators have abnormal characteristics,the company is likely to adopt the means of changes in the scope of consolidation to implement earnings management.The identification method and the corresponding audit countermeasures proposed in this paper can provide certain reference value for the users of statementsand auditors,and help them to effectively identify the earnings management behavior of the changes in the scope of consolidation when they are unable to obtain sufficient information,so that the users of relevant statements can make accurate decisions by using the financial reports,and the certified public accountants can make financial decisions The financial statements give appropriate audit opinions to reduce audit risk.