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Discussion profits of listed companies to manipulate and respond to the new accounting standards

Author: LiuShengKai¡¡WangZhiYu From: www.yourpaper.net Posted: 2009-04-03 09:54:40 Read:
Abstract: The Ministry of Finance officially released in early 2006, 39 companies accounting standards, new accounting standards on January 1, 2007 First introduced in listed companies, will then be gradually extended to all companies. The new accounting standards has made significant adjustments to inventory management, asset impairment, debt restructuring, non-monetary transactions, corporate mergers, these changes will corporate profits, earnings per share and other financial indicators have an important impact. Therefore, it is necessary to discuss in depth the new accounting standards on corporate profits room for maneuver.
Keywords: listed companies; profit manipulation; new accounting standards; fair value
First, the impact of the new accounting standards on the profits of listed companies manipulation

(A) fair value attribute of freedom and limit the scope of
Expand the use of the fair value of the degrees of freedom of enterprise accounting treatment. However, due to the technical difficulty and the fair value judgments more subjective reasons, the space, the way corporate profits adjustment may be deformed. Fair value is one of the highlights of the new accounting standards, new accounting standards implemented in many aspects of prudence introduction of fair value measurement attribute reflects the principle of convergence with International Financial Reporting Standards, reflect more of the future assets and transactions fair, is more relevant. However, at the same time widened due to the introduction of the fair value of the degrees of freedom of the accounting treatment of the Company's management, it is easy to become profit manipulation and earnings management tool. The following analysis of the application of the fair value of a few prone to false profits.
Investment real estate
Measurement of investment property fair denominated and cost pricing model. The new guidelines allow "There is strong evidence that the fair value of investment real estate can be continuously and reliably case, are subsequently measured at fair value model for investment properties, from two aspects to the enterprise profit: In accordance with The new standard requires a measured using the fair value model, no longer depreciated or amortized, reduced costs, increased profits in the case of real estate appreciation, it should be fair to the balance sheet date of investment real estate; the difference between the value of the original book value through profit or loss, profits will increase. This profit whitewash leaving some space.
Non-monetary assets exchange
The guidelines of the "non-monetary assets exchange, the premise is measured at fair value at the same time meet two conditions: that the transaction has commercial substance, and swapped out or swapped assets' fair value can be reliably measured. Although the new standard requires that, in determining whether it is commercial in nature, should be concerned about the existence of related party relationships between the parties to the transaction, the existence of related party relationships may lead to the occurrence of non-monetary assets exchange has commercial substance. These conditions to some extent constrained profit frauds. However, in the judgment of the transactions of commercial substance, due to information asymmetry, objectivity is not strong, or leave a certain amount of space to the adjustment of profits; addition, if the swapped assets and the assets surrendered there is no reference market price must rely on the value of the assessment agencies to assess how to ensure true and fair view of the fair price is a major problem. Listed companies to manipulate profits, entirely possible to bribe the assessment agencies, it named its prices to their advantage.
3. "Accounting Standards for Business Enterprises No. 12 - Debt Restructuring
Debt restructuring accounting standards introduced again measured at the fair value of the property. Debt restructuring accounting standards, four cases of debt restructuring can be recognized gain on debt restructuring. New accounting standards for listed companies to manipulate profits through debt restructuring and open the door, and the more serious losses, the external debt of the company, the easier to manipulate profits. Those two years of losses for the company, in order to keep the company's listing eligibility, the creditors may join hands with the listed companies to manipulate profits, creditors exempt debt of listed companies, listed companies recognized a gain on debt restructuring, in order to achieve the turnaround.
U.S. GAAP and International Financial Reporting Standards focus on the application of fair value to reflect the relevance of accounting information, and our traditional measurement principles under the historical cost, in order to reflect the reliability of accounting information. Developed market conditions, the fair value is relatively easy to confirm, but how fair value recognized in the case of inadequate development of China's market, is a difficult problem, and companies use its profit manipulation, due to the lack of reliable criteria difficult to implement effective supervision.
(B) the accounting option to expand
1 new accounting standards to expand costs capitalization range
This change reflects the convergence with the International Accounting Standards while national policies to support enterprises of technological innovation and advanced manufacturing enterprises. The expansion of the fee is capitalized mainly in two aspects:
First, intangible assets development costs capitalized. New standards of internal research and development projects R & D process is divided into two phases: research and development phases. The research expenditures should be accrued to the current profit and loss, and development expenditures of capitalized meet a series of conditions, is included in intangible assets. This treatment on the one hand will undoubtedly enhance the results of scientific and technological innovation of enterprises, reducing operating margin pressure indicators during the development phase, and also change the asset structure of such enterprises, increase the proportion of intangible assets, are conducive to enhancing their competitiveness in the market . On the other hand, this criterion will be expanded in the use of corporate accounting treatment option. First of all, it is difficult to strictly divided "research" and "development" stage, especially in the financial R & D technical layman, the division of these two phases will depend on the ability to judge and the intention of the authorities of the accounting staff; Second, capitalized development costs several conditions for qualitative description is more difficult to accurately grasp. For example, the feasibility of completing the intangible asset is technically completed "intent" proof of intangible assets and its products "market" and "useful", "enough" technology and resources to support the completion of the development, have the ability to use or sell the intangible asset, the judgment of these conditions will also have a greater subjectivity.
The second is the capitalization of borrowing costs. "Accounting Standards for Business Enterprises No. 17 - Borrowing Costs" will allow the inventory of the capital assets of the original The criteria fixed assets expanded to include fixed assets and take a long time to build or production to get ready for use or sale of state , investment property "; would allow the capitalized borrowing expand the scope of the" special loans and borrowings. The guidelines borrowing costs are included in the cost of the product, will inevitably lead to the increase in inventory assets and profits of the reporting period. But in practice for quite a long time "to grasp the same expanded the accounting treatment option. Thus, two main aspects of the fee is capitalized to the management authorities to manage earnings and even profit leaves room for manipulation.
2. Depreciation and amortization on the subjective judgment of the enhanced
Currently, listed companies take advantage of the depreciation of fixed assets to manage earnings phenomenon is relatively common. Due to the fixed assets of the listed companies are generally larger, only need to adjust the depreciation period of fixed assets can achieve their goals. The provisions of the new Accounting Standards for Business Enterprises No. 4 - Fixed assets "to further expand the companies use of depreciation to manipulate profit space. The provisions of Article 19 of the new standards: "Enterprises should be at least at the end of each year, the life of the fixed assets, estimated residual values ??and depreciation method of the expected useful life and the previously estimated number of differences should be adjusted depreciation of fixed assets life; expected net salvage value is expected and the previously estimated number of differences, estimated net residual value should be adjusted; economic benefits associated with fixed assets realization of the expected major changes, depreciation of fixed assets should be changed. "and adjust Methods applied prospectively, not retrospectively. Therefore, as long as try to find differences based on the life of the fixed assets from the original estimate, it can be changes in accounting estimates to adjust the results, so as to achieve the purpose of manipulating profits. In addition, the new standard for amortization of intangible assets is no longer confined to the straight-line method, and the amortization period is no longer fixed. Therefore, the enterprise may through the adjustment of intangible assets amortization period or method to manipulate profits. Second, the new accounting standards, profit manipulation strategies
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