本文主要阐述的基于准则的会计标准系统可以提供在一个完整的、广泛适用的会计原则一致和清晰的概念框架,从根本上避免了许多例外,但也减少了可能的标准之间的冲突,从而减少使用形式在交易设计的本质欺诈的机会。
Introduction
After the Enron scandal and the Sarbanes bill, the discussion about the method of accounting standards setting has been very going well. The bill instructed the effect of feasibility, research in the United States the United States Securities and Exchange Commission adopt the principles based accounting standards setting and implementation way of economy and society, which will approach to the problem of accounting standards setting that reached a new height. The question of principles or rules based is very important. This is because, first, it is commonly confused current various countries facing the world in the formulation of accounting standards in the process. Second, the research method of accounting standards setting, not only for the auditing, accounting standards setters, and will have a significant impact on the entire stock market and accounting information users. This problem is not only the accounting standards itself, but also in the understanding of the basic theory of accounting and basic problems of accounting on the need to reflection, it is a combination of theory and practice problems, including the practice and theory and the accounting standards setting all levels of institutions. Overall, principle-based accounting principal is more advantageous (Kershaw, 2017).
Rule-based versus Principle-based
For rule-based principle, the financial accounting standards board (FASB) in 2017 October published entitled "American accounting principles guide" , in 2017 July, the U.S. Securities and Exchange Commission has published a research on the U.S. financial ing system by the research foundation of the accounting pattern principles" (Alexander and Jermakowicz, 2017). In the two , the rule oriented accounting standards are as follows first there are many exceptions to the principle of description, according to these criteria will result in the accounting treatment of not paying attention to the nature of the transaction economy (Smieliauskas, 2017). This includes the "line test" and "start mechanism" (On off Switch), they will eventually be financial engineers as the basis, just follow these literal thing, the practical spirit and not pay too much attention to standards. The so-called "boundary inspection", is refers to does not meet certain conditions, cannot carry out a kind of accounting. If not included in the combined statements of condition of the "independent third party investment is significant (at least equal to the special purpose entity of the total assets of 3%)". Start mechanism refers to when certain conditions are met, then the need for a certain accounting. As specified in early American standards, using the equity method accounting of enterprise merger must satisfy twelve conditions, is a typical "start mechanism" for example. Operational guidelines for the large, detailed application of these guidelines which are easy to cause the complexity of rule application and for the standard application of uncertainty (Walker, 2017). No matter what rules oriented intention, there are many rules of the provisions in the accounting standards, does not mean that the rule makers do not want to reflect the essence of economy, mainly because of the objective factors, such as political factors involved in reason, conceptual framework itself is not perfect in many aspects (Wüstemann and Wüstemann, 2017). But objectively speaking, rules oriented easy to reflect the legal form. Such as criteria of merger of enterprises using the equity method could reflect the form, corporate assets, liabilities, financial status and cash flow and the risk of future is not important. The conceptual framework of the American now has a great defect (Alexander and Jermakowicz, 2017). First, it is not mandatory, is mainly used to guide the formulation of accounting standards. Second, some of the contents of it itself is a contradiction. Concepts such as announcement about in practice of accounting measurement has many kinds of methods, such as historical cost, replacement cost, transaction cost, market value, fair value are all can be used to select as measurement standard. But the measurement standard of different reflect different economic reality, namely conceptual framework does not make a choice of measurement attribute, has not given the measurement attribute selection principle (Smieliauskas, 2017). So, today the United States are not the best valuation standard to solve the problem of accounting measurement. If the fair value is the best standard of measurement of financial instruments, but it still today without the use of very good, a very important reason is that the conceptual framework has not given the measurement standard selection principle, makes different people have different selection of measurement attributes, and select different seems to have truth (Kershaw, 2017). Therefore, establish a good conceptual framework is very important. Of course, establish a good conceptual framework is very difficult. How to establish the conceptual framework of a set of internally consistent, and can be widely accepted, for the implementation of goal oriented, it is particularly important (Walker, 2017).
Basic principles based accounting standards has the following advantages.
First principles based accounting standards require the company's accountants and external auditors with more occupation judgment, which can improve the accountant in the preparation and audit of financial statements in the occupation standard. Occupation judgment is the premise of accounting occupation survival, which is also the accounting occupation prestige location. If the accountant occupation judgment can make accurate and reasonable according to the specific environment, it will help to achieve the goal of financial accounting and financial (Alexander and Jermakowicz, 2017).
Second is based on the principle of the application that can make the accounting standards in the content and the form become more concise. Take US for example, issued by the Financial Accounting Standards Committee of the accounting standards has been 147, if coupled with America Association of certified public accountant accounting standards Executive Committee (ACSEC) files, the financial accounting standards board of urgency treatment group (EITF)guidelines on the implementation of opinions and other subordinate group published, its amount is huge, content the complex is the first in the world, even accounting professionals are very difficult to keep pace with the changes of accounting standards, application of accounting standards is also very difficult and expensive (Smieliauskas, 2017). On the contrary, the international accounting standards has been published guidelines for only 41, explain the announcement 33. The comparison is not difficult to understand why the former president of the American Accounting Standards Committee Danny. Berry Voet (Dennis R.Bereford) as early as 1999 had published entitled "the time has come to simplify accounting standards" article appeal to simplify accounting standards.
Third is principles based accounting standards can reduce exceptions standards, and can reduce the conflicts between criteria, thereby reducing on form and substantial arbitrage transaction design. Exceptional items of accounting standards is often in order to balance the information useful and operable and compromise, these exceptions often leads to the criterion is not applicable in some cases (Walker, 2017). For example, some exceptions to allow some transactions and events can continue in accordance with other existing criteria to record range exception, and as with certain exceptions in order to achieve the expected results of accounting (Kershaw, 2017). As for the change of limit profits without follow standards in principle, because the follow standards in principle will profit changes but with exceptions (Smieliauskas, 2017). Moreover, with certain exceptions is to mitigate the impact of the new accounting standards to the transition exception. In the system of accounting standards to the specific rule as the foundation, because of the lack of a conceptual framework is not perfect or even conflict with each other so that didn't work, so inevitably there will be many exceptions, such as American Financial Accounting Standards No. 133rd, "accounting for derivative instruments and Hedging activities" provides a large number of exceptions, regulations and related explanation and implementation guide (Alexander and Jermakowicz, 2017). The provisions of these be quite distinct from each other and focus only on the transaction form rather than substance. Enron Corp is also seen this system defect, and through the design of transaction (using SPE) to achieve the purpose of whitewash statements.
Basic principles based accounting standards setting mode although has more advantages, but there are also some of the following drawbacks.
Occupation judgment using first basic principles based accounting standards require companies to accountants and auditors more, but inappropriate judgments may lead to serious consequences. The fundamental reason lies in the interests of financial scandals led to generate demand and not in the accounting system. After Enron event of WorldCom powerful proof of this view (Kershaw, 2017). In US big company financial scandal on companies and their auditors, investors can strictly follow the occupation morals, the appropriate use of occupation judgment and lack of faith.
Second is comparability and consistency is the key characteristic of whether the financial statements are useful, but the occupation judgment but with strong subjectivity. Even though the same professionals on the similar case also cannot guarantee that every time can make the same judgment. But on the same kind of economic business, there may be different occupation judgment. This may damage the financial information consistency and comparability, even the case of abuse of accounting standards (Walker, 2017).
The formulation of accounting standards according to specific rules based approach, and these advantages and disadvantages exactly the opposite.
To better perform the principle-based principle, first the accounting occupation circle should be conscientious, occupation judgment necessary (Wüstemann and Wüstemann, 2017). The accountant is concerned, must be very rigorous, to study the history of literature, has sufficient occupation judgment ability. Because the essential goal orientation is to reflect economic reality, will is an important reflection of guiding principles of. Accounting standards itself does not provide specific answers, occupation judgment to accountants, to make their own judgment on how to valuation, accounting information should disclosure. So the accounting personnel occupation judgment ability, moral cultivation, due diligence is very important (Kershaw, 2017).
Second the accounting occupation authority should be respected and recognized. This has two meanings on the one hand is the accountant himself to due diligence to make the occupation judgment, have a considerable level, ability and experience worthy of respect and recognition; on the other hand, the authority of the requirements of society should respect the accounting work, chief financial officer and other accounting work of the people should be respected and recognized. Only in the premise of accounting people respected, can realize the due diligence; on the contrary, the accountant in a respected, not recognized by the environment, by non-accounting factors around cannot achieve the goal orientation (Smieliauskas, 2017).
Third the allocation of resources accounting information guidance value to recognize. Take the CPA in a suitable position, do not exaggerate the impact of economic accounting (Walker, 2017). One of the mistakes at present, is often to the profit of the enterprise as Everything is contained therein., be equal to anything of the index, by using the profit as the index to assess the performance of the judgment standard of entrepreneurs, even listing and delisting, the evaluation of the performance of local government, this approach is not appropriate (Wüstemann and Wüstemann, 2017). In the past, we regard the accounting information down to the "on the ground", "useless", and that accounting has now moved towards another extreme, the accounting information value holding to "heaven" these two kind of attitude is not scientific. In fact, the profit index is only an opinion, a kind of evaluation only, take profit as can measure everything, everything, is very dangerous (Kershaw, 2017). In the United States, stock option pricing at the market, and the market on the basis of profit pricing, is clearly overestimated the accounting information.
Finally is the formulation of the requirements of the accounting standards. Experience in accounting estimates, economic essence, a thorough understanding of and so on, goal orientation on the accounting standard setters have high requirements. To develop a complete set of conceptual framework, consistent, through inside, the key should can achieve the accounting objective, accounting objective and accounting work of profound understanding of the intrinsic relationship. In addition, standard setters in the formulation of standards, to grasp the implementation of "decision useful accounting target " this central idea according to their own experience, theory, morality, belief based on independent, objective, fair comment.
Conclusion
All in all, accounting standards system based on principles can provide widely applicable accounting standards in a complete, consistent and clear conceptual framework and fundamentally avoid the numerous exceptions, but also reduce the possible conflicts between criteria, thus reducing the use of forms in transaction design essence of fraud opportunity.
References
1.Alexander, D and Jermakowicz, E (2017), A true and fair view of the principles/rules debate, Abacus 42(2): 132–164
2.Kershaw, D (2017), Evading Enron: Taking Principles Too Seriously In Accounting Regulation, The Modern Law Review, 68(4): 594–625
3.Smieliauskas, W. (2017). Principles-Based Reasoning about Accounting Estimates, Accounting Perspectives 11(4): 259–296
4.Walker, R (2017), Reporting entity concept: a case study of the failure of principles-based regulation, Abacus 43(1): 49–75,
5.Wüstemann, J And Wüstemann, S (2017), Why Consistency of Accounting Standards Matters: A Contribution to the Rules-Versus-Principles Debate in Financial Reporting, Abacus 46(1): 1–27
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