When enterprises carry out asset reorganization, such as mergers, decoupling and restructuring, bankruptcy liquidation, etc., they must conduct audits and evaluations in accordance with regulations or practices. Although the new "Accounting Standards for Business Enterprises No. 20 - Business Mergers" does not stipulate that business mergers must pass the evaluation procedure, but uses "book value" or "fair value" to record the accounts, it also stipulates that the "business merger occurs" Various directly related expenses, including audit fees and evaluation fees paid for the merger...". This shows that evaluation is often carried out in business mergers.
When conducting valuations, asset appraisal agencies often use the same or similar procedures as auditing methods, such as supervision, confirmation, sampling, testing, etc. When auditing, the audit institution needs to use fair value to test the value of assets, and use this to make provision for asset impairment or determine gains and losses from changes in fair value. This is not very different from assessment. In this way, evaluation and auditing are closely related. How to properly handle the relationship between evaluation and auditing in actual operations directly affects the efficiency and quality of evaluation and auditing. The author is based on the practice of conducting audits simultaneously with several assessments. It is believed that there is a need for division of labor and collaboration between assessment and auditing, and mutual tolerance in business reports.
The "inclusion" in this article means the mutual inclusion and accommodation of asset assessment and auditing.
1. Problems that arise in the interleaved operation of asset appraisal and audit
When an enterprise entrusts asset appraisal and audit to be carried out at the same time, this "simultaneity" often does not start in parallel from the same starting date. carried out. However, asset valuation and auditing often require valuation and auditing adjustments for the same asset at the same time. When the "assessed value" obtained is inconsistent with the "audit verification number" (hereinafter referred to as the "approval number") and a "crash" occurs, the entrusting unit will be at a loss as to what to do.
Both asset appraisal and auditing require the determination of the actual amount of claims and debts, but the results of the two determinations are often inconsistent. Both asset appraisal and audit need to determine the actual value of various physical assets, but the results of the two determinations are often inconsistent. For example, the new accounting standards application guide uses a long section to describe the principles and methods for determining the fair value of assets in unusual business combinations under control. There is a method for determining the value of fixed assets using asset appraisal. During the audit, the net value of fixed assets is verified by making up for depreciation or reversing the depreciation that has been made, and impairment provisions are used to offset the book value of physical assets. However, in fact, this does not truly reflect the value of the physical assets. As for the price change of cold-backed and spoiled inventory. To determine the value of physical assets such as profit and loss, the methods used in auditing are not as reliable as those used in asset valuation.
Therefore, asset assessment and auditing need to collaborate, not only to avoid "crash", but also to give up shortcomings and take advantage of each other, so as to obtain more ideal results.
2. General principles of collaboration and division of labor when asset assessment and audit are conducted at the same time
1. Coordination time point
The deadline for audit statements and the date of asset assessment The base date should be set at the same point in time, so that the assets and liabilities of the audited and assessed units on a certain day can become the unified objects of audit and assessment, facilitating collaboration.
2. Data connection
Whether the asset evaluation report uses the audit results, or the audit report uses the asset evaluation results, the data connection problem must be properly handled. Asset evaluation should take the "end point" of the audit as the "starting point" of the evaluation, that is, the evaluation should be based on the "approval number" that has been obtained: while the audit should take the "end point" of the evaluation as the "starting point" of the audit, that is, on the basis of the "approval number" that has been obtained. An audit is conducted on the basis of the assessed value that has been derived. When issuing a report, if the evaluators do not agree with the audit results, they can make adjustments during the evaluation process; if the auditors do not agree with the evaluation results, they can make adjustments during the audit process. However, evaluators and auditors should be cautious when making such adjustments.
3. Division of labor and collaboration
When asset valuation uses the asset-based method to evaluate the overall value of an enterprise, the monetary funds, receivables, bond investments, and pending assets in the balance sheet The audit is responsible for verifying the specific amounts of various asset items that do not have physical form, such as amortized expenses, deferred income tax assets, long-term prepaid expenses, etc., as well as all liabilities. If there are no special circumstances, the audit results should be tolerated.
Physical assets such as fixed assets and inventories, intangible assets such as trademarks and patents, and equity assets such as stock investments should be audited to verify the quantity or original cost (book value) and determine their actual value. It is the responsibility of the assessor. The evaluation results should be fully considered and accommodated during the audit. Any physical assets and marketable securities that are reduced in quantity or no longer have a physical form during the inventory should be treated as impaired in the audit.
When the asset valuation and audit are undertaken by two intermediaries respectively, the valuation agency can send personnel to participate in the audit process during the audit. If the valuation only involves physical assets and listed securities, the audit and valuation agencies can Send personnel separately to jointly confirm the quantity or historical cost of the assets being evaluated.
3. Specific operations
(1) Simultaneous auditing and evaluation of physical assets
1. The main task of auditing physical assets is to conduct physical inventory. Profit and off-book physical assets can be valued and included in the assets.
2. During the audit of depreciation items, no additional provision or write-back will be audited. The final determination of the accumulated depreciation amount (the difference between the replacement value and the assessed value) should also be completed by the assessment.
3. During the audit of the construction project in progress, if there is a physical form, the balance will be retained according to the cost, or transferred to the fixed asset project, and the physical object will be submitted for evaluation to finally determine the value: if it does not exist in physical form, it cannot be If future operations bring direct economic benefits, they should be submitted for approval and write-off during the audit and will not be evaluated.
4. Adjustment accounts for inventory cost differences, purchase-sales price differences, price decline reserves, etc., and impairment reserve accounts for fixed assets and projects under construction are generally treated as a general ledger account during audit, and their amounts are transferred to Relevant adjusted accounts. If the enterprise is still operating as a going concern, the merchandise purchase and sale price difference account may not be changed, leaving it to be appropriately adjusted based on inventory valuation during asset appraisal.
5. Inventories in transit, namely "material (commodity) procurement" and "material procurement" items, if found to be overdue but not actually shipped by the supplier during the audit, should be transferred to " Other receivables" items are subject to audit processing.
Fixed asset cleanup projects can be audited and evaluated by referring to the methods of projects under construction.
(2) Simultaneous auditing and evaluation of intangible assets and equity investments
1. If the property rights of intangible assets still exist, they should be included in the assessment; if the corresponding property rights no longer exist, If it exists, it should be written off in the audit.
2. When auditing stock investment, bond investment and other equity investments, the actual number of shares should be actually counted and checked with the book records. If there is a gain or loss, the reason should be found out and the actual number of shares should be calculated according to the book cost or face value. The investment amount is adjusted and included in the audit profit and loss, and then transferred to the evaluation.
When the determination of the value of these investments requires the use of the audit report of the invested unit, or even the audit of the invested unit, the evaluation can use the results of the audit. For listed stocks and bonds, it should be determined through evaluation based on the securities market price, or it can also be determined through negotiation between the audit and evaluation institutions.
(3) Simultaneous auditing and evaluation of claims and debts
The audit and evaluation of claims and debts, except for bond investments, should be implemented by the auditor.
IV. Relevant disclosures in audit and evaluation reports
When using the work results of both parties for asset evaluation and audit, clear disclosures must be made in the audit report and evaluation report:
(1) When the audit is conducted before the asset evaluation, the audit report may include a description similar to the following in the explanatory paragraph: "This audit adopted the method of auditing first and then evaluating. The fixed assets, The audited number of physical assets such as inventories is based on the physical inventory number and book cost price; the actual value of intangible assets and equity investments is calculated based on the book value after inventory verification." In the subsequently completed valuation report, explanations similar to the following can be made in the valuation principles and valuation methods sections: "receivables, monetary funds, long- and short-term prepaid expenses, deferred income tax assets, and various liability items, and capital reserves." The assessed value of each item of owner's equity... shall be based on the approved number on the same base date, except for individual sub-items with special circumstances."
(2) When the asset appraisal precedes the audit, the following statement should be made in the audit report: "While we are implementing the audit procedures, the client also entrusts XX asset appraisal agency (or This firm has evaluated the physical assets and intangible assets of the audited entity. The values ??of the above assets disclosed in this report all use the relevant data in the evaluation report."
5. Existing Problems
Collaboration and inclusion in assessment and audit improve work efficiency, there is no duplication of work, and the results of audit and assessment will not "crash". (Such as corporate mergers, restructuring, bankruptcy liquidation) services are particularly in demand. However, there are some problems. For example, the current financial accounting system stipulates that the profits and losses caused by adjusting assets during auditing should be included in current profits or retained earnings, while the appreciation and depreciation of asset assessments stipulates that they should be included in capital reserves. In the above-mentioned collaboration, after many tasks that should be completed by audit were completed by evaluation, the adjustment amount that should have been included in profit and loss or retained earnings was included in capital reserve, which is contrary to the principle of relevance in accounting.
However, this defect does not hinder the realization of the client's goals under normal circumstances. As long as the evaluators and auditors cooperate tacitly, the methods are appropriate, and the operations are conscientious, the final conclusion will still be fair.
It is best to find an accounting firm to inquire specifically about this question, because it involves too much content and it is difficult to determine the time