Research On The Audit Risk Of Goodwill Impairment Of Listed Companies In Internet Information Service Industry

The development of Internet information technology,the popularization of electronic equipment,and the expansion of users have boosted the vigorous development of Internet information service industry.With the rise of the M&A wave,the listed companies in this industry have opened the way of outward expansion of M&A,and the M&A with high valuation and high premium has formed a large scale of goodwill.In 2018,about 24% of A-share listed companies made provision for impairment of goodwill,totaling 167.055 billion yuan,of which 17.359 billion yuan was made by listed companies in Internet information service industry.Internet information service industry has a large scale of goodwill impairment,high risk of goodwill impairment and unique industry characteristics,so this paper chooses to start with this industry and choose Zhengzhong Pearl River Audit 37 Mutual Entertainment as a research case.Studying the audit risk of goodwill impairment in this industry is helpful for certified public accountants and accounting firms to put the idea of risk prevention and control into the whole audit process and effectively identify and deal with the audit risk of goodwill impairment.This paper selects the audit of 37 Mutual Entertainment in Zhengzhong Pearl River as a case,starts with the background understanding,combs the literature,draws lessons from the research results and experience at home and abroad,defines relevant concepts on this basis,and takes modern risk-oriented audit theory as the guiding ideology,deeply understands the audit risk model as its important content,constructs the theory of identifying and responding to the risk of major misstatement of goodwill impairment,and checks the risk control,thus forming the theoretical basis of this paper.In addition,this paper analyzes the goodwill and its impairment of listed companies in Internet information service industry from 2016 to 2021,and analyzes the current situation of goodwill impairment audit of listed companies in Internet information service industry from four dimensions: key audit items,audit procedures,audit opinions and punishment of accounting firms.On the basis of combing the formation and impairment of the goodwill of the case company,and combining with the audit procedures implemented by certified public accountants,this paper probes into the risk of major misstatement in the impairment audit of the goodwill of 37 Mutual Entertainment,and explains the causes of the inspection risk.This paper finds that the major misstatement risks at the level of auditing statements of goodwill impairment of 37 Entertainment include business risk,policy change risk and internal control risk,while the major misstatement risks at the level of auditing confirmation of goodwill impairment include the risk of income reliability and the risk of management’s bias in earnings management.The inspection direction is characterized by insufficient professional competence of certified public accountants,insufficient review of the appropriateness of experts’ work and inadequate auditing procedures.In view of the present situation of goodwill impairment audit in the whole industry and the risk of goodwill impairment audit in37 Mutual Entertainment,this paper puts forward four suggestions for certified public accountants and accounting firms: improving the professional competence of certified public accountants,appointing suitable certified public accountants,maintaining reasonable professional doubts,putting risk management awareness throughout the audit work,optimizing audit procedures,using new audit tools,perfecting the quality control system of the firm and strengthening project quality control.The risk of serious misstatement of goodwill impairment is the inherent risk of the audited entity.Certified public accountants cannot reduce this risk and reduce the audit risk of goodwill impairment.It is necessary for the audited entity to do a good job in accounting for goodwill and its impairment and strengthen the quality of internal control.Strengthening supervision by the regulatory authorities can force the audited units to strengthen internal control,do a good job in accounting treatment,reduce the possibility of earnings management,and also urge certified public accountants and firms to be vigilant and implement more adequate audit procedures,thus reducing the audit risk of goodwill impairment.Therefore,this paper also puts forward some suggestions for the audited units and regulatory authorities to reduce the audit risk of goodwill impairment.