Research On Audit Risk And Countermeasures Of Goodwill Under The "PE+Listed Company" Model

Accompanied by rapid growth in the capital markets,M&A have become an important way to achieve value growth.In order to get rid of the drawbacks of the traditional merger and reorganization mode,enterprises begin to explore the M&A mode in partnership with investment institutions.Due to the difficulties in the exit mechanism of IPO,and the unique industrial experience and project resources of listed companies,Private Equity(PE)also prefer to cooperate with listed companies.Under this background,"PE+ listed company" type buyout funds develop rapidly.However,the high goodwill generated by the frequent M&A of listed companies through buyout funds has also received more and more attention from regulators and investors.This paper based on the game theory,the theory of modern property ownership and the asymmetry information theory,studies the conflict of interest between enterprises and PE,and its impact on goodwill and goodwill impairment.Based on the modern risk-oriented auditing theory,this paper constructs the audit risk framework of goodwill under the "PE+listed company" model from two aspects:major misstatement risk and inspection risk.Chooses Aier Ophthalmology,a typical listed company to set up buyout funds,as the case study object,to analyze its goodwill formed by buyout funds and impairment of goodwill.And stand in the perspective of auditors to identify the audit risk of such goodwill.The research found that there are the following inherent risks in the major misstatement risk level:(1)The fuzzy control of buyout funds results in the classification risk of goodwill;(2)The high valuation of the project results in a large initial amount of goodwill at the second acquisition stage of listed companies;(3)After the cultivation project is incorporated into the listed company,the decline in performance increases the risk of goodwill impairment;(4)Listed companies have strong subjectivity in setting the parameters of goodwill impairment test;(5)The information disclosure of buyout funds and goodwill is not standardized.In addition,listed companies also have control risks related to buyout funds and goodwill.The above major misstatement risks may cause the listed company to unintentionally or intentionally misrepresent the accounting information,and cannot truly reflect the goodwill situation.In the aspect of inspection risk,it may be due to the auditor’s excessive reliance on the asset evaluation report of the third party,the formality of the audit procedure for goodwill,and the limitations of the traditional audit sample method,resulting in the high inspection risk.In view of the identified audit risks of goodwill under the "PE+listed company" model,this paper,from the perspective of auditors,puts forward targeted countermeasures at the audit planning stage,risk assessment stage and risk response stage,and constructs the response framework for audit risk.Hoping the case study presented in this paper will offer some valuable advice for auditors to deal with the audit risks of goodwill under the "PE+listed company" model,and provide policy implications for regulatory agencies and listed companies.