Research On The Audit Risk Identification And Response Of Goodwill Impairment Of Broad-Ocean

With the development of the economy and the loose management of China’s merger and acquisition policies,corporate mergers and acquisitions have continued to increase,and highpremium mergers and acquisitions have gradually become normal.As the scale of goodwill of listed companies continued to expand,a huge backlog of goodwill impairment risks continued to accumulate.As the concentration of performance commitments expired and experts discussed to modify the follow-up measurement of goodwill into the distribution method,the risk of huge impairment of goodwill eventually broke out in 2018,which was expected.The impact of goodwill on the company’s financial statements has attracted attention from all walks of life.The China Securities Regulatory Commission and the Bureau of Finance have respectively made reminders and arrangements for the accounting supervision and audit supervision of goodwill matters,and the Institute of Auditors has also issued risk warnings one after another.The issue of goodwill has become an important matter and high-risk area in the audit of CPA’s annual report.In this context,doing research on the identification and response of audit risks is of great value.This article adopts the case analysis method.On the basis of the literature collation and theoretical analysis of goodwill and goodwill auditing,it conducts a statistical analysis of the supervision and audit status of China’s goodwill and goodwill audit,and a typical case company is selected.The case company of this article Broad-Ocean,which acquired Shanghai--Eorive and set foot in the new energy industry to form a huge amount of goodwill of 2.937 billion yuan.After 11 mergers and acquisitions,goodwill accounted for as much as 40% of net assets,which was much higher than the industry average.In 2018,the company Broad-Ocean,made a provision for impairment of goodwill of 2.419 billion yuan at a time,and its impairment amount ranked first in the industry,having made the company a loss of 2.376 billion yuan that year,almost covering the profit of the previous eight years.The formation and impairment of goodwill have a huge negative impact on the company.And therefore,the Guangdong Securities Regulatory Bureau issued a warning letter to the case comapny and its annual report audit form and third-party evaluation agency.So,it is representative to choose this case to conduct audit risk analysis of goodwill impairment.This article builds a "risk factor-risk link-risk consequence" identification framework of goodwill impairment material misstatement risk,and after a specific analysis of the case company,it concludes these major misstatement risks: the valuation of the M&A target and the merger consideration are unreasonably determined;there are large inconsistencies in the judgment of impairment signs;the identification of asset groups is too simple;the use of assessment agencies is not rigorous;the prediction of the amount of goodwill impairment is too radical;the selection of assessment methods is arbitrary and the disclosure of goodwillrelated information is not Wait fully.And on the basis of the aforementioned research,the risk points of goodwill impairment audit inspection are summarized.Finally,for the identified audit risk of the impairment of the goodwill of Broad-Ocean,targeted countermeasures were proposed,including judging the reasonableness of the valuation of the acquisition target and the determination of the merger consideration;evaluating the management’s goodwill impairment test process;strengthening the audit risk response capabilities and standardization of the internal management of the firm.The relevant policy recommendations propose to improve the legal system and supervision mechanism;strengthen the disclosure of goodwill information and legislative division of responsibilities.