Minimizing Goodwill Impairment Differences Globally
No fast or simple solution
A crucial exercise for acquisitive businesses is to routinely assess the goodwill booked in an acquisition to determine whether there has been any impairment and, if so, how much. Why? Because inaccurate goodwill accounting can:
- Distort financial reporting, potentially leading investors and analysts to lose confidence in the company.
- Cause a company’s stock price to plummet.
- Expose the company and its executives to potential legal, regulatory, and reputational risks.
However, it is apparent that in recent years there have often been notable differences in goodwill impairment conclusions across the world. So what is the root cause or causes of these differences? Is it varying valuation practice due to the lack of consistent global standards, or the different stages of development of the valuation profession globally? Is it cultural or language differences? Is it inconsistent application of the accounting and auditing standards? Or maybe it’s all of the above, as well as other factors that are unclear as this stage.
"Minimizing goodwill impairment differences globally: No fast or simple solution" explores some of these issues for insights.