Research On The Influence And Prevention Of Major Misstatement Of Performance Commitment

As the capital tending to be advanced,it is accustomed to see events of enterprise reorganizations.High-level evaluation and huge premium are formed when mergers along with acquisitions are processing,resulting in a huge goodwill.In order to show the rationality of evaluation and premium and the good prospects of corporations in the future,the increasingly number of corporations which are acquired trend to high performance commitments on behalf of stockholders.The covenant makes the enterprise show good business development in a certain period of time,which attracts the attention of many investors.Many enterprises can meet the standard during the performance commitment period,but there is a "performance change" after the commitment period,which attracts the attention of the majority of investors.After careful inspection and examination by the CSRC,a few years later,the enterprise finally admitted its financial fraud.It is mainly to falsify the authenticity of the performance commitment by some means to make the performance commitment achieve the expected goal.However,in the previous year,certified public accountants did not find their fraudulent practices,so they were punished by the CSRC.As researchers of the audit direction,we should find out the characteristics of the audit work of the performance commitment enterprises and the faults of the auditors,find out the risk points of major misstatements in this kind of enterprises,and remind the auditors to do a good job in the audit work.As a typical case of performance commitment enterprises,this paper tries to find its major misstatement risk points by calculating audit risk,analyses its result of evaluation,sees the whole through a small part,and extends to the audit of this kind of enterprises.Just as performance commitments are used more frequently in the capital market,auditors can also make quick responses.As a whole,this dissertation starts from the background framework,discusses the pivotal literature,then mentions the concepts,theories and quantitative methods,makes descriptive statistics on China’s performance commitment.After that,it establishes a quantitative model to explain and analyze the occurrence of the event.Also,it connects the case with the risk quantification procedure,and finally draws a conclusion and brings forth prevention proposals.The reason why I choose this kind of risk as the research object is that the performance commitment enterprise has a significant misstatement risk point which is different from other enterprises and has certain characteristics,we can prescribe the right measures to the event and tackle the crucial point.After actual analysis and calculation,the risk of major misstatement of the enterprise lies in the difference between the overall situation of the industry and the situation of the enterprise;there are loopholes and defects in the internal control of the enterprise,including improper management arrangement and lax management supervision of the performance committer;in addition,it also covers the improper handling of goodwill impairment.Reasonable suggestions are put forward based on the problems that are likely to exist in this kind of enterprises.To sum up,the feature of this dissertation is to study the special risks mentioned above,with the purpose of founding a kind of method called FCA(Fuzzy Comprehensive Appraisal)to distinguish and judge the probability of material misstatement of companies with this kind of peculiar covenant,searching for the main point of major misstatement and offering effective measures to certified public accountants to prevent the appearance of audit failure.