Under the modern risk-oriented audit, a reasonable evaluation of materialmisstatement risk is crucial for certified public accountants to determine the level ofmateriality and implement further substantive procedures....Under the modern risk-oriented audit, a reasonable evaluation of materialmisstatement risk is crucial for certified public accountants to determine the level ofmateriality and implement further substantive procedures. This paper proposes a materialmisstatement risk assessment model based on the combined use of entropy weight-TOPSISand grey relational analysis methods and evaluates the material misstatement risk in China'sMedical CRO Industry by quantitative means. Taking the medical CRO industry as anexample, this paper selects some case companies in the industry for horizontal comparison,and at the same time conducts a multi-year data comparison on the enterprise with the highestaudit risk among them. The results show that Bio-Sincerity Pharmaceutical is an enterprisewith relatively high audit risk in the Medical CRO Industry in recent years, and thecalculation results of the model are basically consistent with the actual analysis. Toeffectively prevent financial risks and audit risks, financial personnel should participate inbusiness management, analysis and budgeting, and auditors should also focus on auditsegments such as dynamic cash flow, debt structure, and business contracts and debtmanagement in combination with the characteristics of the Medical CRO Industry, so as toeffectively reduce the risk of audit misstatements.展开更多
There has been a steady growth of goodwill impairments in the Chinese stock market since the adoption of the impairment approach in accounting.The influence of goodwill impairments on a firm’s financial position and ...There has been a steady growth of goodwill impairments in the Chinese stock market since the adoption of the impairment approach in accounting.The influence of goodwill impairments on a firm’s financial position and profitability give reason to doubt its current and future performance.We examine whether auditors,as a crucial external monitor,identify the information risks of goodwill impairments and express their concerns about financial reporting quality in their audit opinions.Using a sample of firms listed on China’s Ashare market from 2007 to 2017,we test the association between goodwill impairments and the type of audit opinion received in the same financial period.Our findings are as follows.First,the probability of receiving a modified opinion increases with the amount of goodwill impairments.Second,the positive association between goodwill impairments and modified audit opinions is driven primarily by earnings management risks.Third,this positive association is more salient when auditors are industry experts and there is no auditor–client mismatch.Fourth,auditors are more sensitive to the amount of goodwill impairments than to their mere existence.Overall,we document that auditors perceive goodwill impairments as a signal of information risks and communicate their concerns to investors to avoid litigation.展开更多
文摘Under the modern risk-oriented audit, a reasonable evaluation of materialmisstatement risk is crucial for certified public accountants to determine the level ofmateriality and implement further substantive procedures. This paper proposes a materialmisstatement risk assessment model based on the combined use of entropy weight-TOPSISand grey relational analysis methods and evaluates the material misstatement risk in China'sMedical CRO Industry by quantitative means. Taking the medical CRO industry as anexample, this paper selects some case companies in the industry for horizontal comparison,and at the same time conducts a multi-year data comparison on the enterprise with the highestaudit risk among them. The results show that Bio-Sincerity Pharmaceutical is an enterprisewith relatively high audit risk in the Medical CRO Industry in recent years, and thecalculation results of the model are basically consistent with the actual analysis. Toeffectively prevent financial risks and audit risks, financial personnel should participate inbusiness management, analysis and budgeting, and auditors should also focus on auditsegments such as dynamic cash flow, debt structure, and business contracts and debtmanagement in combination with the characteristics of the Medical CRO Industry, so as toeffectively reduce the risk of audit misstatements.
文摘There has been a steady growth of goodwill impairments in the Chinese stock market since the adoption of the impairment approach in accounting.The influence of goodwill impairments on a firm’s financial position and profitability give reason to doubt its current and future performance.We examine whether auditors,as a crucial external monitor,identify the information risks of goodwill impairments and express their concerns about financial reporting quality in their audit opinions.Using a sample of firms listed on China’s Ashare market from 2007 to 2017,we test the association between goodwill impairments and the type of audit opinion received in the same financial period.Our findings are as follows.First,the probability of receiving a modified opinion increases with the amount of goodwill impairments.Second,the positive association between goodwill impairments and modified audit opinions is driven primarily by earnings management risks.Third,this positive association is more salient when auditors are industry experts and there is no auditor–client mismatch.Fourth,auditors are more sensitive to the amount of goodwill impairments than to their mere existence.Overall,we document that auditors perceive goodwill impairments as a signal of information risks and communicate their concerns to investors to avoid litigation.
