Comparison and thinking of old and new accounting standards
In February 2006, the Ministry of Finance issued a new social standard. The new accounting standards system strengthens the new concept of providing investors and the public with useful accounting information for decision-making, realizes the integration with international practices, constructs a relatively complete organic unified system for the first time, provides a useful reference for improving international financial reporting standards, and realizes a new leap and breakthrough in the construction of enterprise standards in China. The new enterprise accounting standards system consists of three parts: basic standards, specific standards and application guidelines. Compared with the old accounting standards, the new accounting standards have undergone great changes from basic accounting standards to specific accounting standards.
First, compare
(A) the comparison between the new basic standards and the old basic standards
The basic accounting principles in the new basic standards continue to retain the principles of importance, prudence and substance over form, but also emphasize the principles of comparability, consistency and clarity. However, accrual basis and historical cost are no longer the basic principles of accounting.
(B) The comparison between the specific standards in the new accounting standards and the old specific standards
1. Add the missing parts in the old accounting standards.
(1) Recognition and measurement of financial instruments, presentation of financial instruments and transfer of financial assets
The four specific accounting standards for financial instruments are mainly applicable to financial enterprises, which have a wide and profound impact on financial enterprises, especially financial institutions listed or about to be listed. For example, the standard stipulates that all derivative financial instruments should be measured at fair value and moved from off-balance sheet to on-balance sheet. This requires listed banks and securities companies to make good use of derivative instruments as a "double-edged sword", because internalization will have a great impact on enterprises' risk management by using derivative financial instruments. Enterprises should not only consider economic factors such as cash flow, but also consider the influence of derivative financial instruments on statements to avoid excessive fluctuations in statements. There are five differences between the new accounting standards and the current accounting system for financial enterprises: the introduction of the concept of financial instruments, the accounting of derivative financial instruments, the differences in pricing basis, the differences in recognition and the differences in asset impairment preparation.
(2) Original insurance contract and reinsurance contract
China has never formulated the original insurance contract standards, and the practical guide is based on the Accounting System for Financial Enterprises. Compared with the accounting system of financial enterprises, the new standard has the following characteristics: distinguishing insurance risks from non-insurance risks; Increase combat readiness test; Distinguish between the original insurance contract and the reinsurance contract.
(3) Oil and gas exploitation
This standard is a description of the business handling of the three major oil companies in China (PetroChina, Sinopec and CNOOC). The main differences between the new accounting standards and the original enterprise accounting system are: the calculation method of mining rights and interests, the loss of wells and related facilities, the original system adopts the straight line method, and the new standards introduce the output method and the life average method. The new standard allows the withdrawal of waste expenditure reserve, setting the subjects of "oil and gas assets", "accumulated loss" and "oil and gas assets impairment reserve", and canceling the subject of "geological achievements".
(4) Investment real estate
The old standards did not regard real estate as a separate project, but scattered the relevant contents of existing investment real estate in other related standards. The new standard adopts two methods to measure investment real estate: cost model and fair value model. The measurement method of the cost model is the same as the original standard, but when the fair value model is adopted, there is no need for amortization or depreciation, and there is no need to make provision for impairment. At the end of the period, it is only necessary to adjust the book at fair value, and the difference is directly included in the current profit and loss.
(5) biological assets, enterprise annuity funds and share payment standards have been increased.
These three standards have formulated more rigorous and feasible operational guidelines for aspects that are not standardized or refined in the old accounting standards. It fills the gaps in accounting standards such as agricultural assets, supplementary endowment insurance and option incentive behavior.
2. The main part of the new accounting standards that have undergone breakthrough changes on the basis of the old accounting standards.
(1) Asset impairment reserve. The main differences between the old and new standards are:
The new standard puts forward the concept of "asset group" and expands the application scope of the asset impairment standard. In judging the signs of asset impairment, the new standard is more clear than the current system requirements, and the measurement principle of recoverable amount is more operational. Moreover, the new standard introduces the concept of fair value, makes restrictive provisions on the measurement and use of fair value, and emphasizes that once fair value is used, the accounting treatment of historical cost value will stop. At the same time, the provision for impairment of assets generated by fair value shall not be reversed in future accounting periods. This provision is the biggest difference between the old and new standards in terms of impairment provision.
(2) Debt restructuring methods. The biggest difference between the old and new standards is that the adoption of fair value and debt restructuring income will be included in the current profit and loss, so the adoption of the new standards will affect the current profit and loss rather than equity. The definition of debt restructuring in the new standard is that when the debtor has financial difficulties, the creditor makes concessions according to the agreement reached with the debtor or the court's ruling. The new standard highlights the premise of the debtor's financial difficulties and the business essence of the creditor's final concession.
(3) Accounting treatment of business combination. At present, most enterprise mergers in China are under the same control, which is not necessarily a voluntary transaction between the merging party and the merged party, and the value of the merger is not the result of bargaining between the two parties, which does not represent fair value. Therefore, book value is the basis of accounting treatment to avoid profit manipulation. Business combination not under the same control (including absorption merger and new merger) can be negotiated by both parties, which is the result of voluntary transactions between both parties, so it has fair value recognized by both parties and can confirm the purchase of goodwill. The basic consolidation theory on which the new consolidated financial statement standards are based has changed, from the parent company theory to the entity theory. The determination of the scope of consolidated statements pays more attention to substantive control, and all subsidiaries that the parent company can control must be included in the scope of consolidation, regardless of the shareholding ratio. Subsidiaries with negative owner's equity should also be included in the scope of merger as long as they are going concern.
(4) the impact of income tax. The differences between the old and new standards are as follows:
On the tax basis, the old standard emphasizes the differences between income and expenses, tax revenue and tax deduction, mainly from the perspective of the amount of occurrence, while the new standard emphasizes the temporary differences between the book value of an enterprise's assets and liabilities and its tax basis on a certain day, and analyzes them from the perspective of balance. In the recognition of income tax, the old standards require enterprises to adopt tax payable method and tax impact accounting method (including deferred method and debt method) to calculate income tax; The new accounting standards require enterprises to use the balance sheet debt method to calculate deferred income tax. In the measurement of impairment recognition, the old standard does not stipulate that impairment reserve can be accrued by deferred tax debit, while the new standard stipulates that impairment reserve can be accrued under certain circumstances and can be reversed when it meets the requirements in the future.
(1) long-term investment accounting method. The differences between the old and new standards are as follows:
The old standard confirms the equity investment difference in investment, amortizes it by stages and adjusts the investment income. If it is negative, it should be recognized as capital reserve. The new standard stipulates that if the initial investment cost of long-term equity investment is greater than the fair value share of the identifiable net assets of the invested enterprise, it will be recognized as goodwill and the goodwill will not be amortized; If it is less than, the retained earnings will be directly offset.
Second, think.
The update of accounting standards has great influence on enterprises, investors, certified public accountants, auditors and regulators of government departments. Macroscopically, this is a landmark change in the accounting history of China; microscopically, it involves interests and choices in all aspects of social life. Compared with the old accounting standards, the new accounting standards have the following advantages:
(A) the new accounting standards make financial information more reliable.
The basic standards in the new standards clearly stipulate that the first quality feature of accounting information is reliability, which requires "accounting confirmation, measurement and reporting based on actual transactions or events, truthfully reflecting all accounting elements and other relevant information that meet the requirements of confirmation and measurement, and ensuring the authenticity, reliability and completeness of accounting information". The new accounting standards ensure the authenticity and reliability of accounting information from three aspects: 1. The new accounting standards fully consider the influence of changes in market factors on the value of assets, emphasize the recognition and measurement of assets according to the definition of assets, and require enterprises to withdraw corresponding impairment reserves when assets cannot bring economic benefits to enterprises; 2. The new accounting standards fully consider the specific business environment of enterprises. Allow enterprises to flexibly choose their own accounting policies according to the specific business environment without violating the unified national accounting system, such as making provision for bad debts for other receivables, adopting different percentages and adopting different depreciation policies for fixed assets; Fully reveal the market risks faced by enterprises; 3. The new accounting standards require enterprises to carefully identify the risks that may be caused by uncertain factors such as contingencies, confirm the obligations arising from contingencies that meet the conditions for recognizing liabilities as liabilities, and fully disclose them in the notes to accounting statements. The new accounting standards also require the undertaker to consider the time value of money when confirming the liabilities caused by leasing.
(B) The new accounting standards meet the requirements of economic development, and the content is innovative.
The new accounting standards system has expanded from the previous standards focusing on industrial and commercial enterprises to 39 standards, covering many fields such as finance, insurance and agriculture. , covering all economic businesses of enterprises, and filling the blank of new business handling regulations under the conditions of market economy in China. The main innovations are as follows:
In the fields involved, the contents that were not in the original guide but were not detailed or unclear were added. Such as: confirmation, measurement and presentation of enterprise annuity fund, share payment, investment real estate, biological assets, financial instruments, insurance contract terms, etc.
In the specific content of accounting treatment methods, some new concepts are introduced, such as:
Introduce the concept of fair value. The new standard introduces fair value measurement, such as requiring listed companies to consider the fair value of assets exchanged and whether the transaction has commercial substance, requiring listed companies to consider the fair value of restructured debts in debt restructuring transactions, and requiring related gains and losses to be confirmed in the income statement. These regulations will make the assets and transactions of listed companies more fairly reflected, and it will no longer be feasible for some listed companies to reduce costs by exchanging low-priced assets for high-priced assets.
The new standards reflect the time value of funds. The standards for the recognition and measurement of financial instruments require the Company to adopt the effective interest rate method for accounts receivable and accounts payable and measure them in amortized cost. This makes listed companies with long-term receivables and payables have to write down the book value of these long-term assets and liabilities as the discounted amount of future cash flows. This treatment fully embodies occupation cost, and will promote the management of listed companies to optimize the asset-liability structure and product credit sales policy to a certain extent.
Many new regulations have also been made for the method of batch exposure, such as:
The disclosure of financial risks is more direct and transparent. The standard requires that derivative financial instruments be included in the on-balance-sheet accounting, so that some high-risk financial investments made by listed companies can be reflected in the financial statements in time, so that management can obtain relevant information more directly, which provides conditions for better performing their duties, and at the same time enables investors to understand derivative financial instruments of listed companies more directly.
(C) The new accounting standards reflect the convergence with international accounting standards.
The new standards fully draw lessons from international financial reporting standards, and achieve convergence with international financial reporting standards except for a few matters. The new standard has achieved comprehensive coordination with International accounting practices. The new accounting standards fully reflect this objective requirement and incorporate substance over form into the basic principles of accounting; In addition, it is basically consistent with International accounting practices in asset evaluation, liability accounting, revenue recognition and improvement of financial reporting system.
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Thoughts on the Paper (Design) of Accounting Standards for Asset Securitization in China
1. The purpose and significance of the topic:
Asset securitization is a structural financing method, which combines illiquid assets into a financing tool that can be issued and sold more freely in the capital market. Since the first asset securitization business appeared in the early 1970s, its development has never stopped. By the end of 2008, the balance of mortgage-backed security (MBS) and asset-backed securities (ABS) in the United States was 7.59 trillion dollars and 2.67 trillion dollars respectively. Although China's asset securitization business is still in its infancy and exploration stage, it can be expected that with the reform of China's financial system and the further development and opening up of the financial market, China's asset securitization market will gradually grow in the near future. At the same time, China's asset securitization accounting regulations are still in an imperfect stage. Therefore, it is of great practical significance to explore how to improve the accounting norms of asset securitization in China, objectively reflect the essence of asset securitization business, ensure the reliability and relevance of asset securitization accounting information, promote the development of asset securitization market in China and meet the regulatory needs of regulatory agencies.
2. Main research contents (including thesis outline):
The paper is divided into four parts: The first part defines the concept of asset securitization and its essence as a structured financing method, and discusses its influence on monetary policy and financial supervision. The second part introduces the latest development of asset securitization in the United States and its history and development in China. The third part focuses on the analysis of the norms of the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) on asset securitization accounting, as well as the differences and influences of the two models. The fourth part, on the basis of reviewing the existing accounting standards of asset securitization in China, analyzing the existing problems and reasons, and combining with the international advanced experience, discusses how to improve the accounting standards of asset securitization in China to adapt to the development of asset securitization market in China. The outline is as follows:
1. Introduction
1. 1 The research background and significance of this paper.
1.2 Literature Review
1.3 Structure and thinking of this paper
2. Overview of asset securitization
2. 1 the essence of asset securitization
2.2 the impact of asset securitization on monetary policy and financial supervision
3. Asset securitization markets in the United States and China.
3. 1 Overview of American Asset Securitization Market
3.2 History and development trend of asset securitization market in China
4. Relevant regulations of foreign asset securitization accounting.
4. 1 Accounting Recognition of Asset Securitization
4.2 Accounting Measurement of Asset Securitization
4.3 Asset Securitization Financial Reporting Issues
5. Explore and improve China's asset securitization accounting standards.
5. 1 Status and Problems of Accounting Standards for Asset Securitization in China
5.2 Thoughts on the Development of Asset Securitization Accounting in China
3. Conditions, methods and measures for completing the thesis, including experimental design, research plan, data collection, references, etc. ;
Conditions for completing the thesis: according to the knowledge learned, under the careful guidance of the tutor, use the resources of the school library, electronic reading room and related newspapers and periodicals to complete the writing of the thesis.
The research methods and measures are mainly based on the history and present situation of international and domestic asset securitization market, referring to various materials and the literature of accounting associations and accounting practitioners on securitization accounting.
Data collection is mainly carried out by borrowing books from the school library, referring to papers related to asset securitization and web databases such as China HowNet and VIP Information.
Main references:
[1] Zhao Yuhua et al., 2007, Principles and Practice of Asset Securitization, Renmin University of China Press.
[2][ America] Andrew Davidson et al., 2006, Asset Securitization-Construction and Investment Analysis, Renmin University of China Press.
[3] Zhang, 2004, The Essence and Effect of Asset Securitization, Ph.D. Thesis of Fudan University.
[4] Chen Qiumei, 2005, "Asset Securitization Accounting-International Model and China's Choice", master's thesis of Central University of Finance and Economics.
[5] Zhang, 2007, "Research on Accounting Treatment of Asset Securitization", master thesis of Southwestern University of Finance and Economics.
[6] Ministry of Finance, 2005, Provisions on Accounting Treatment of Credit Asset Securitization Pilot.
[7] FASB, FAS 140: Accounting for transfer of financial assets and services and debt settlement, September 2000.
[8] IASB, International Accounting Standards No.39 Financial Instruments: Recognition and Measurement, 20031February.
[9] International Financial Reporting Interpretation Committee, SIC 12 merger-special purpose entity, 2004 1 1 month.