The Research On Zhangqu Technology’s Goodwill Impairment Auditing Risk

Since the authority intended to relax the merger policies,the listed companies in A-stock market increasingly expand its scale through frequent merger and acquisition.From the good perspective,companies can largely benefit from merger and acquisition to acquire rapid development.However,the scale of goodwill is becoming larger,adding risk of goodwill to the capital market,which is not sustainable for the long-term development of the enterprise.Goodwill impairment brings lots of uncertainty and risk to the enterprises and the whole capital market.It deviates from the original intention of the government’s policy to support merger and reorganization to promote domestic industrial upgrading.In 2018,our country economy overall downward,as M&A policy tightening,the performance of target companies promise expired or was under expectations.Many listed companies in the confirmed goodwill,especially the "light" assets such as games and media industry have experienced a goodwill-impairment shock,appearing the phenomenon of goodwill "thunder".Due to the extremely special nature of goodwill,management and supervisors need to use professional judgment.Meanwhile,goodwill impairment test has been widely questioned due to its difficulty in operation and high cost,which leads to higher auditing risk for certified public accountants.Multiple accounting firms have also been questioned and warned by CSRC for reasons such as inadequate audit procedures in the audit of goodwill impairment.Therefore,studying the audit risks of goodwill impairment as well as preventive and countermeasures is conducive to improving the audit quality of certified public accountants,safeguarding the interests of investors and regulating the development of the capital market.The main structure of this paper is as follows:At first,this paper is based on the goodwill and audit risk of related literature,summarizing the current situation of A-share listed company’s goodwill and audit.This paper introduced common measures to deal with goodwill impairment auditing risk.Secondly,this paper is based on the case of Zhangqu Technology,a listed Internet game company.This paper describes the formation and impairment process of Zhangqu Technology’s huge goodwill.Thirdly,this paper is guided by the classic risk-oriented audit theory.Then,the paper analyses the audit risks in the process of goodwill audit.To be specific,the risk of material misstatement mainly includes the risk of unreasonable goodwill valuation,the risk of management earnings management,and the risk of vague information disclosure.The inspection risk mainly refers to inadequate professional skepticism and professional competence of certified public accountants in the audit process.Thirdly,this paper takes the main business process of audit as the main line,elaborates the goodwill impairment audit case of Zhangqu Technology from the four stages of preliminary business activity,risk assessment stage,further audit procedure and drawing audit conclusion,and concludes the main problems in the implementation of auditing process.Finally,the article puts forward with the corresponding measures to prevent and response to the auditing risk.This paper analyzes goodwill impairment from the perspective of auditing risk,hoping to enrich the related research of goodwill impairment audit to a certain extent.Through the study,this paper also expects to provide some references for the auditors to prevent and respond to the audit risk of goodwill impairment.