Can auditing facilitate the effective implementation of goodwill accounting? A perspective based on key audit matters

Jingjing Xu, Yingwen Deng, Lin Wen and Kuanliang Wang

International Review of Financial Analysis, 2025, vol. 98, issue C

Abstract: This study investigates the role of auditing in facilitating the effective implementation of goodwill accounting through key audit matters (KAMs). The findings show that excess goodwill increases the likelihood of goodwill being considered as a KAM, and firms with goodwill as a KAM are more likely to recognize goodwill impairment. The positive relationship between excess goodwill and a goodwill KAM is more pronounced when firms have a clean audit opinion, small profits before goodwill impairment, or high information transparency. However, the impact of a goodwill KAM on impairment recognition is weaker for firms with small profits. Overall, the findings highlight the crucial role of auditing in identifying clients' excess goodwill and encouraging the recognition of goodwill impairment, aligning with the perspectives of the International Accounting Standards Board.

Keywords: Key audit matters; Goodwill impairment; Excess goodwill; Auditing (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1057521924008287
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:98:y:2025:i:c:s1057521924008287

DOI: 10.1016/j.irfa.2024.103896

Access Statistics for this article

International Review of Financial Analysis is currently edited by B.M. Lucey

More articles in International Review of Financial Analysis from Elsevier
Bibliographic data for series maintained by Catherine Liu ().