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Re-understanding of the importance judgment of property right accounting
Responsible person Ye Qinghui
Theme management
The purpose of describing this paper is to discuss and analyze the improper accounting behavior of enterprises that affect the fair expression of financial statements by applying the materiality principle in practice, as well as the deviation of accounting auditors' execution of materiality judgment, and put forward countermeasures. The analysis method of this paper mainly analyzes the essence and characteristics of the concept of importance and the decision-making process of importance judgment in theory. Users of financial statements need certified public accountants to provide independent and impartial audits to ensure that there are no major misstatements or omissions in the financial statements prepared by enterprises. The audit service of certified public accountants does not guarantee that the financial statements are completely free from misstatement or omission. Therefore, certified public accountants should clearly state in the audit report that they "fairly reflect ... in all major aspects (and) have reason to believe that there is no material misrepresentation in the financial statements". This statement shows that the management authorities providing financial statements and certified public accountants providing audit services only give reasonable guarantees to the accounting information provided. The so-called "reasonable assurance" simply means that providing financial statements and audit services only guarantees the correctness and integrity of major accounting matters. From this perspective, we can see the influence of materiality judgment on the fair expression of financial statements. Therefore, as early as the establishment of 1975 FASB, it was pointed out that "the concept of importance is extremely important to provide financial information in a concise, economical and timely manner". However, how to determine the importance boundary of limited liability to meet the needs of both the supply and demand sides of accounting information is the main topic of importance judgment research. The "expectation gap" formed by improper division may bring legal responsibility to accounting information providers. The research and analysis of this paper holds that the essence of the concept of importance is subjective and vague personal feelings, while the concept of accounting importance is defined by the subjective feelings of report users. Therefore, from the perspective of accounting auditors who use the concept of materiality (hereinafter referred to as joint auditors), the concept of materiality can be divided into subjective and objective, as well as basic and derivative concepts. The concept of materiality should be used in the preparation of financial statements in financial accounting and the examination of financial statements in auditing. The application of materiality principle in financial accounting is mainly used to filter unimportant accounting data to save information production costs and enhance the understandability of statements; The application of materiality principle in auditing is to identify important accounting information, control auditing risks and accomplish auditing tasks efficiently and effectively. The importance of these two areas is different. In addition, the application of materiality principle in financial accounting has both positive and negative effects. When judging the importance, the first thing to emphasize is to give consideration to both quality factors and quantity factors, especially the quality factor that has been neglected for a long time in practice, which deserves special emphasis. Secondly, when judging, we should make comprehensive analysis and consideration from the overall height of the report. In addition, this paper also tries to put forward a theory that can fully explain the interaction between quality factors and quantity factors in the process of importance judgment and decision-making, and explain the long-standing expectation gap of importance level. The full text is divided into seven chapters. According to the structure of this paper, the main contents of each chapter are explained in turn: Chapter One "Introduction". This chapter mainly discusses the application status and existing problems of materiality judgment, and explains the research motivation of this paper, and then lists several main problems studied in this paper. Chapter II "Investigation of Important Archives". This chapter introduces and comments on the concept of importance put forward by various authoritative organizations and scholars in chronological order, and divides the early and recent research literature according to the time when FASB 1973 was established. Early archival literature is an important principle, which limits the concept of importance to accounting work and the preparation of financial statements in order to save costs and focus on reporting. With the explosive growth of modern accounting data and the need to provide easy-to-understand financial statements economically and effectively within the time limit, accounting auditors must make better use of the materiality principle. In particular, modern risk-oriented audit work must rely on importance judgment everywhere. Then, this chapter reviews the regulations or standards of importance in Chinese mainland, the United States, Taiwan Province, China and other countries and regions. Among them, the "importance" of SAB99 published by the US Securities and Exchange Commission in 1999 is the most significant. The third chapter is "SAB99' s new viewpoint on importance and its new challenge to practice". SAB99 announcement emphasizes the following three points: first, the judgment of importance should consider both quantitative factors and quality factors, especially the quality factors that have been neglected for a long time in practice; Secondly, the interaction between quality factors and quantity factors often makes small-sum projects or seemingly unimportant projects become major projects; Third, mistakes and omissions intentionally arranged by enterprise management authorities, regardless of the amount, should be regarded as major projects. However, most commercial lawyers believe that the above SAB99 regulation may be overkill, which will bring new challenges and pressures to accounting practice. Then, this chapter uses two practical cases to illustrate the problems of SAB99: the bankruptcy case of Enron Energy Company in the United States and the coup case of IBM. At the same time, combined with the analysis of the following examples, it shows how quality factors affect the importance judgment: (1) Although the misstated items are due to accounting estimation, the net profit turns from profit to loss; (2) Selective adjustment of unimportant misstatements; (3) the classification is wrong, but it does not affect the net profit; (4) Disclosure of "contingent losses" and its cost-effectiveness. Finally, this chapter introduces and evaluates some common methods to quantify the preliminary judgment number of importance level in practice. The rapid evolution of the concept of materiality in the application of financial accounting and auditing has led to the backwardness of theoretical research. Therefore, the following chapters will examine the essential connotation and conceptual extension of the concept of importance through comparative analysis and inductive reasoning. The fourth chapter is "Comparative Analysis and Research of Importance Theory". The discussion in this chapter is based on the formal definition of importance by FASB and IASC, which is regarded as "basic definition or concept" and "original concept". These theoretical definitions are defined from the perspective of users. However, the connotation of the concept of importance is a subjective and vague concept. Therefore, in the real world, theoretical logical reasoning is often limited by the scientific and technological ability or mental ability of human beings at that time, so that it can't be done, and procedural rationality has to be used to ensure the rationality of the results. The requirement of rationality of results is "it will not affect the judgment of users"; Reasonable procedure means "it will not have a significant impact on the overall expression of financial statements". This chapter then discusses some derivative concepts derived from the basic concept of materiality: materiality level, materiality principle, materiality concept in audit, the relationship between materiality level and audit risk, subjective materiality level of examiners, objective materiality level of users' opinions, etc. It is pointed out that the application of derived importance concept is a process of correcting importance level. In addition, from the extended definition of the concept of materiality, we may be able to understand the essence of accounting materiality more thoroughly. Therefore, this chapter discusses the following related concepts: importance principle and cost-effectiveness principle, importance principle and prudence principle, importance and possibility, importance and correlation, importance and integrity, etc. Finally, this chapter further discusses the role of the principle of materiality. The fifth chapter is "the influence of cultural differences between countries on the evaluation of importance level". There is a causal relationship between the dimension of cultural structure and the evaluation of accounting values and importance level. The cultural structure dimensions that affect the development of accounting values are individualism, power distance, uncertainty avoidance and masculinity. Among them, "uncertainty avoidance" and "individualism" have the greatest influence on accounting values. If the professionalism, unity, robustness and confidentiality of accounting values are taken as the coordinates to measure the evaluation of importance level, the relative ranking of judges in different countries can be described. Finally, this chapter examines the relative level of accounting values in some countries and regions in the world. Chapter VI "New Exploration and Suggestions on the Interpretation of the Concept of Accounting Importance". The first section of this chapter first analyzes how the influence of importance is formed from the perspective of epistemology, and what are the components of the degree of importance (influence). This paper holds that quality factors are not equal to nature; The quantity factor is not equal to the amount. Attributes should include quality factors and relative quantity; The amount is absolute; Quantitative factors include quantity and relative quantity. SAB99 particularly emphasizes the importance of quality factors in importance judgment. This chapter attempts to put forward "quality importance table" and "quality importance table" as tools to study quality factors. Then, this chapter draws lessons from the financial statement analysis model of investment theory, and puts forward "whether economic matters affect the future cash flow of enterprises" as the importance standard. This chapter also draws lessons from the "utility indifference curve" of economics and puts forward the "indifference curve of importance influence" to describe the interaction and substitution process between quality factors and quantity factors in importance judgment. In addition, this chapter also uses "fuzzy theory" to explain the fuzzy elasticity formed by the combination of analog information and fuzzy concepts, and explains the reasons for the following problems: there is an expected gap between the providers and users of financial statements, but the current financial statements are still quite acceptable. Finally, this chapter puts forward policy suggestions from three aspects: standard setting, accounting education and securities regulatory agencies. The last part of the paper summarizes the main conclusions of each chapter, summarizes the shortcomings of this study and the follow-up research direction of this topic, as the conclusion of the full text.
Accounting Department of Publishers Management College
Date: September 8, 2003
Resources type theory
Formatted pdf
Identifier urn: calis: 235010-etd/o5605.t.pdf.
Source http://210.34.4.13: 8080/lunwen/detail.asp? Serial number =209
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