The new accounting standards promulgated by the Ministry of Finance on February 15, 2006 will be first implemented in listed companies on February 10/2007, which is the inevitable result of accounting adapting to the development of China's market economy. Compared with the current accounting standards, the new accounting standards no longer use historical cost valuation as the basic principle of accounting, but conditionally introduce the basis of fair value measurement, revise the valuation method of ending inventory, change the accounting treatment method of debt restructuring, non-monetary transactions, business combination and the basic theory of consolidated financial statements, and some assets impairment reserves are not allowed to be reversed. These changes in the new accounting standards will have a great impact on the earnings management of enterprises.
First, the new accounting standards on corporate earnings management restrictions
1. Expanded the scope of consolidated statements, and put an end to the practice that enterprises exclude enterprises with poor operating conditions from the scope of consolidation by reducing the shareholding ratio and separating several subsidiaries, thus whitewashing the overall performance of enterprise groups. The measurement standard of subsidiaries in the new accounting standards is essentially based on "control", not equity ratio. All subsidiaries controlled by the parent company should be included in the scope of merger, including small-scale companies, subsidiaries with special business nature and subsidiaries with negative owner's equity. The consolidated statements prepared in accordance with this regulation will truly reflect the operating results and financial status of the entire enterprise group composed of parent companies and subsidiaries, and reflect the change from focusing on parent company theory to focusing on entity theory.
2. The LIFO method of issuing inventory pricing is cancelled, so that the inventory circulation of enterprises can be truly reflected, and the current inventory expenses of all enterprises are reflected by objective historical costs, which strengthens the comparability of accounting information and eliminates artificial adjustment factors. When the inventory price rises, if the LIFO method is adopted, the issued inventory will be included in the current cost at the highest price, reducing the current profit; If the first-in first-out method is adopted, the lowest price is included in the current cost, which increases the current profit. When the inventory price is falling, the situation is just the opposite. The new accounting standard cancels the LIFO method of issuing inventory pricing, and stipulates that enterprises should adopt LIFO method, weighted average method or individual pricing method to determine the actual cost of issuing inventory.
3. Business combination under the same control is measured by book value, which will help prevent enterprises from using business combination under the same control to manipulate profits. The assets and liabilities of the merged party are confirmed according to the original book value, and will not be adjusted according to the fair value, nor will goodwill be formed; When preparing the consolidated income statement, the net profit realized by the merged party before the merger date is reflected separately in the income statement. At present, most business combinations in China are under the same control, and the merger consideration should be the fair value confirmed by both parties according to the original regulations. Although the fair value has to be evaluated and confirmed by intermediary agencies, human manipulation factors interfere with its fairness too much, and many companies get rich overnight through mergers and acquisitions.
4. Once the provision for impairment of some assets is withdrawn, it cannot be reversed, which reduces the possibility of adjusting profits between accounting periods by withdrawing and offsetting the provision for impairment. The provision for impairment of assets will inevitably increase the current expenses of enterprises and reduce the current profits, and vice versa. Through the provision and reversal of impairment reserve, all the profits of the enterprise can be redistributed in different accounting periods The new standards stipulate that other relevant accounting standards shall be applied except for inventory, investment real estate measured by fair value measurement mode, consumable biological assets, assets formed by construction contracts, deferred income tax assets, unguaranteed residual value of lessors in financial leasing and the impairment of unexplored mining rights. Once the asset impairment loss is confirmed, it cannot be reversed in future accounting periods.
Second, the new accounting standards for corporate earnings management space
1. The new fixed assets standard stipulates that the depreciation period, depreciation method and estimated net salvage value of fixed assets shall be reviewed at least once a year. When the estimated service life and estimated net salvage value are different from the original estimate, they should be adjusted. The fixed assets of listed companies are generally relatively large in value. As long as there is evidence that its service life is different from the original estimate, the depreciation expense of each period can be changed by changing the accounting estimate, thus generating different accounting income. Moreover, according to the provisions of the new accounting standards, the depreciation period, depreciation method and estimated net salvage value of fixed assets are changed by the future applicable method, without retrospective adjustment, which simplifies the accounting treatment of enterprises changing depreciation period, net salvage value and depreciation method, and facilitates enterprises to correct accounting profits in each period by changing the service life, depreciation method and estimated net salvage value of fixed assets.
2. The new accounting standards have expanded the scope of assets and loans capitalized by borrowing costs, and the broader capitalization conditions have brought more space for earnings management of enterprises. According to the new accounting standards, assets eligible for capitalization refer to assets that can still be used or sold after a long period of purchase, construction or production activities. This includes not only fixed assets, but also inventory and investment real estate that take a long time to reach the saleable state. Where the construction or production of related assets occupies general loans other than special loans, the amount to be capitalized shall be calculated and determined according to the capitalization rate of general loans for the part where the cumulative expenditure exceeds the special loans on a weighted average. That is, the interest on fixed assets occupied by general loans is also allowed to be capitalized.
3. Allow the capitalization of intangible assets development expenses, and the amortization method and amortization period are optional, giving enterprises more room to adjust the amortization amount of intangible assets in each accounting period. The cost of internal R&D projects is divided into two stages. The expenditure in the research stage is included in the current profit and loss, and can be capitalized as long as it meets the relevant conditions stipulated in the standards after entering the development process. Enterprises can increase or decrease the capitalized amount or expensed amount by grasping the opportunity to divide R&D into two stages. In addition, the amortization method of intangible assets is no longer limited to the straight-line method, the amortization period is no longer fixed, and intangible assets with uncertain service life are not amortized.
4. Conditionally introduce fair value measurement attributes to enhance the elasticity of corporate income. (1) The income from debt restructuring is recognized at fair value. In debt restructuring, the difference between the book value of the original debt and the fair value actually paid is recognized as the income of debt restructuring and included in the current profit and loss, rather than directly included in the owner's equity as capital reserve. At the same time, the non-cash assets transferred by the debtor should also be recognized at fair value. For companies that can't pay off their debts, once they are exempted in whole or in part, their restructuring income will be directly reflected in the income statement. It is also possible for the controlling shareholder of a listed company to change the current profit and loss of the listed company through debt restructuring when the company loses money, or for the sake of maintaining the company's performance or issuing shares, so as to confirm the restructuring income. (2) The exchange income of non-monetary assets is recognized at fair value. The new standard stipulates that non-monetary assets transactions that are in line with commercial nature and whose fair value can be reliably measured can be valued at fair value, and the difference between the fair value of the exchanged assets and its book value is included in the current income and recorded in the income statement. Compared with the original standard that non-monetary transaction income can only be included in capital reserve, the exchange of non-monetary assets under the new accounting standard will directly generate profits. Although the criteria limit the conditions for adopting fair value valuation, this condition only depends on the professional judgment of accountants on whether the transaction has commercial substance. Obviously, the new standards have greatly increased the enthusiasm of related parties for interest transfer and asset replacement through debt restructuring and non-monetary asset exchange. (3) The investment real estate standards also adopt the fair value measurement model. If there is an active market and its fair value can be reasonably estimated, the fair value measurement model can be adopted, and its book value can be adjusted on the basis of the fair value of investment real estate on the balance sheet date, and the difference between the fair value and the original book value is included in the current profit and loss. Under the condition that China's asset appraisal market is not sufficient at present, it is obviously difficult to confirm the fair value.
5. Expanded the scope of impairment. It is not limited to the original "eight" assets, but also includes inventory, biological assets, construction contract assets, financial assets and deferred income tax assets. At the end of the accounting period, it is necessary to judge whether there are signs of possible impairment of assets, and make provision for impairment accordingly.
6. The limitation that the provision for impairment cannot be reversed is limited to some assets. The provision for impairment of inventory, consumable biological assets and deferred income tax assets should still be reversed if it meets the requirements.
Third, how to standardize earnings management.
From the above comparison, we can see that although the new accounting standards have reduced the choice space of accounting policies and accounting estimates to a certain extent and restricted the earnings management of enterprises, they have left room for other aspects of earnings management of enterprises, and even expanded the operating space. How to standardize the earnings management of enterprises under the new accounting standards is becoming more and more important.
1. Establish and improve the internal accounting control system of enterprises. One of the organizational characteristics of modern enterprise system is the separation of ownership and management rights, which will inevitably lead to information asymmetry between enterprise owners and operators. A perfect internal accounting control system can prevent accounting risks from the source and system through mutual restriction and supervision in all aspects, which can not only ensure the safety and integrity of the owners' economic interests, but also enable managers to perform their fiduciary responsibilities smoothly and finally ensure the authenticity and reliability of accounting information.
2. Pay attention to on-the-job training of on-the-job accountants. The promulgation and implementation of the new accounting standards marks the convergence of China's accounting standards and international accounting standards, but in accounting practice, the improvement of accounting personnel's quality lags far behind the pace of accounting standards reform. Through the vocational training of on-the-job accountants, the theoretical and professional abilities of accountants are constantly improved, and the knowledge and skills of accountants are constantly updated, supplemented, expanded and improved. We should pay attention to cultivating and improving the professional judgment ability of accountants, so that they can correctly understand the influence of changes in some accounting treatment methods on enterprises in a specific environment. In particular, accountants should fully realize the different meanings and consequences of earnings management and accounting fraud. Responsible persons and accountants who manipulate accounting profits and provide false accounting information should be severely punished according to law.
3. Strengthen the construction of accounting professional ethics. Accounting fraud and information distortion caused by the lack of accounting professional ethics have become a global and worldwide problem. China's market economy system is not perfect. With the transformation of old and new systems, coexistence of various economic forms, diversification of business methods and mutual infiltration of various economic types, the construction of accounting professional ethics is more important to prevent accounting fraud.
4. Standardize the corporate governance structure. Constantly improve the external capital market of enterprises, strengthen the supervision of securities market and the management of merger and acquisition market, and vigorously develop the manager market; Improve the internal board of directors of enterprises, introduce independent directors, establish audit committees, and form an effective balance mechanism among shareholders' meeting, board of directors, board of supervisors and managers.
5. Continue to strengthen the self-discipline mechanism of CPA industry. The CPA profession should base itself on safeguarding public interests, further reform and improve the self-discipline system, enrich and strengthen self-discipline means, establish a joint defense mechanism for dishonesty in the profession, actively promote judicial intervention, severely crack down on irregularities and fraud in the profession, and ensure the quality of information disclosure.
6. Vigorously cultivate and develop the asset appraisal intermediary industry. China's asset appraisal industry started late and the market order is not standardized enough. With the wide application of the fair value valuation basis under the new accounting standards, it is urgent to establish a relatively complete legal system, a perfect management system and a sound practice standard system in the asset appraisal market as soon as possible, and cultivate a team of appraisers with high professional ethics and professional quality to meet the requirements of market economy and industry development, improve the social credibility of the industry, better serve the market economy and create conditions for the smooth implementation of the new accounting standards.