Research On Audit Of Goodwill Impairment Of Listed Companies In China

Goodwill is a hot topic in the current capital market.With the relaxation of China's M&A restructuring policy in recent years,the total A-share capital market goodwill reached a record high in 2017.These high-value mergers and acquisitions,in a strict sense,cannot be called "assets." The future earnings from these high-value goodwill have been discounted at the time of M&A and are reflected in the financial statements in advance.In 2018,a number of companies appeared to face a decline in performance due to the huge amount of goodwill impairment,which caused the market to question the authenticity of the financial information of listed companies.Goodwill has become the focus of public opinion.The media have published articles like "goodwill" which is a "reputation" that harms the interests of investors.As the last check-in accountant auditing the listed company's external disclosure of financial statements,it has naturally been pushed to the forefront,becoming the focus of media questioning and government regulation.The risk supervision and accounting risk warnings issued by the CSRC,the Ministry of Finance,the China Insurance Association and other government regulatory authorities are rare in the past years.A large number of listed companies were questioned by the regulatory authorities due to high goodwill,and even conducted secondary inquiries.The company was dealt with accordingly.Under the supervision of this enhanced reputation risk warning,these high-value goodwill have certainly become the high-risk areas for CPA audits.Based on a large number of literatures and related theories,this paper examines the process of the formation of high-value goodwill in China in recent years,related accounting treatments,the issuance of relevant documents and inquiries by the regulatory authorities,the case of media questioning,and the cause of business in 2018 in 2017.According to the situation of non-standard audit opinions,etc.,it is concluded that the high-value goodwill impairment provision is still the high risk of financial statement audit in the next few years.Due to the complexity of the process of depreciation of goodwill and the existence of human manipulation factors,it is difficult for the audit to objectively obtain evidence.This paperbelieves that in the process of auditing the impairment of goodwill,it is not allowed to limit the determination of the amount of impairment,and should have an in-depth understanding of the enterprise.The business strategy and dynamics identify whether the audited entity has the incentive to use the impairment of goodwill for earnings management,and determine whether the management's earnings management incentives affect the selection of key accounting estimates in the process of goodwill impairment.Finally,the paper selects the representative of the case from the market segment,industry share,and company's goodwill.An analysis of the audit of Huayi Brothers(30027)related to the impairment of goodwill in 2018,and believes that although Huayi Brothers has accrued 9.7 billion goodwill impairment in 2018,the audit recognized this determination and issued No reservations.However,according to the audit response strategy obtained in this paper,it is believed that Huayi Brothers still has the suspicion of less depreciation of goodwill in 2018,and there is still the possibility of large-scale depreciation of goodwill in the coming years.