Traditional Small And Medium Enterprises Accounting Development Strategies: Building A Conceptual Framework

There is a common problem in the current accounting standards and regulations in many countries, that is, the formulation of standards and regulations is mainly for large enterprises and listed companies, and basically does not consider the accounting needs and special problems of SMEs.

The development of traditional SME accounting has been increasingly restricted by the previous conceptual framework.

In order to give full play to the accounting function of the traditional SMEs, the author believes that we can draw on the construction method of the previous conceptual framework to construct a new accounting framework for traditional SMEs.

The new framework should not only be consistent with the old framework, but also embody distinct personality characteristics, that is, highlighting the accounting characteristics of traditional SMEs.

In addition, from the perspective of the development of things, there is still a point of convergence between the new framework and the old framework, so that SMEs can smoothly pition to the development of large enterprises listed companies.

With regard to the construction of the new framework, the author has the following suggestions: 1.

For many years, theorists have always believed that financial accounting and management accounting are separated from each other.

The data generated by financial accounting are mainly used to provide information to the outside world. The users of information are mainly banks, shareholders, tax authorities, etc. the data generated by management accounting are mainly designed to meet the needs of internal management of enterprises.

One of the reasons for the separation of financial accounting from management accounting is that financial accounting is usually unified and standardized, while the methods and means of management accounting are freely chosen. Two of the reasons lie in the fact that large enterprises and listed companies are capable of differentiating the two functions of internal reporting and external reporting, that is, they can set up specialized accountants to record and retain basic accounting data, engage in financial accounting work, and set up specialized personnel for basic data processing and collation.

However, for traditional small and medium-sized enterprises, because of their simple accounting institutions and weak accounting staff, separating management accounting from financial accounting can only increase the financial burden of enterprises.

In addition, the owners of small and medium enterprises (generally corporate managers) have the ability to understand accounting statements, and the diversification of accounting reports can only increase the difficulty of information understanding.

In fact, financial accounting and management accounting are not completely separated.

As we all know, part of the data required by management accounting is provided by financial accounting.

It is necessary for small and medium-sized enterprises to compile a financial report jointly with management accounting and financial accounting, which contains both the information of external reports and the concise internal management information.

At present, some software developers are trying to design a new financial software to bridge the understanding between management accounting and financial accounting.

Once the development of the software is successful, small and medium-sized enterprises will gain a lot of money, not only get concise and important management information, but also directly export external reports, and save financial costs.

Therefore, the preparation of the new concept framework for the financial reporting of traditional SMEs should take into account the effectiveness of management, strive to prepare financial reports at the lowest cost and maximize their effectiveness. The management information provided also ensures adequate, extensive and easy analysis. It enables managers to know how much marginal contribution each major product or production line can make.

Further, it is necessary to provide information on variable costs, fixed costs, including depreciation and other amortization.

(two) consistency.

Consistency mainly includes two meanings: first, the new conceptual framework should be standardized and unified as much as possible; two, the new conceptual framework must be inclusive.

From a certain point of view, consistency seems to be due to efficiency requirements.

Although Anglo - Saxon accountants once criticized sternly for consistency, they agreed that consistency resulted in the generation of large amounts of meaningless data.

Free choice is very important, such as the choice of accounting policy, but the basic principles should be followed. The limit of freedom can never exceed the assets, that is, assets, assets can not suddenly become liabilities, income is income, income can not become a unified cost range.

Too much emphasis on free choice can also lead to inefficiency.

A standardized system can overcome this defect.

The standardization system can generate huge savings, and software supply, curriculum training, accounting services, tax returns and auditing can benefit from it.

A standardized system can stimulate credit institutions to intervene in SME accounting and train their staff to conduct data analysis in a standardized way.

On the other hand, when designing a new conceptual framework, we should also realize that although the accounting requirements of small and medium-sized enterprises are simple, with the growth of enterprises, it will become more and more complex. Enterprises will need more detailed internal management information, and the external users also need to reveal the accounting information more fully.

The design of the new framework needs to consider the possibility of upgrading from simple account system to complex system.

(three) tax compliance.

It is very difficult for financial reports to be compatible with tax reports.

Large enterprises and listed companies usually carry out computerized accounting, so keeping accounting information is not a problem.

By keeping accounting information, they can provide economic reports for managers and shareholders very conveniently, and also prepare tax returns for the tax authorities.

But for small companies, two sets of data are lost.

The tax and management of two sets of reporting data will not only waste a lot of accounting time, but may also confuse owners (or managers).

Therefore, for small and medium-sized enterprises, the preservation of accounting records can best be coordinated on a unified basis and try to harmonize with tax requirements so as to achieve a simplified and practical purpose.

In the process of compatibility between financial reports and tax reports, the two most important reporting items are depreciation and allowance.

Because the depreciation rate permitted by the tax law is often different from the depreciation rate stipulated in accounting, how to clearly list the two aspects of information contained in these items in unified reports is also one of the problems that need to be solved in the new conceptual framework.

Two, the new concept of traditional small and medium enterprises (SMEs): the accounting objective is the logical starting point of conceptual framework construction.

The accounting objectives of traditional small and medium-sized enterprises are different from those of large enterprises and listed companies. It should provide useful information for decision makers, such as owners, managers, tax authorities, creditors and other limited information users in the simplest and practical form of simplified reporting.

(two) confirm the foundation and accounting subjects.

The design of the new conceptual framework takes into account the stages of the development of the enterprise. It can start from the cash basis and gradually increase to a simple accrual basis until the complex accrual basis.

The following are the specific plans: the micro enterprises (or less than 5 persons): cash basis.

Small businesses (6 to 50 persons): accrual basis; simplified standard accounting chart.

Provide simple management information.

Medium-sized enterprises (51 to 250 persons): accrual basis; complex standard accounting chart.

Provide slightly more complex management information.

Large and unlisted enterprises: accrual basis; most accounting items stipulated in the old framework.

Provide complex management information.

Large and publicly listed enterprises: accrual basis, and all accounting items stipulated in the old framework.

Provide as detailed management information as possible.

Because small businesses generally need simple data and paction types are very limited, their aggregation is also very simple.

A micro enterprise or small business with a very simple business operation does not need the deep analysis of data.

But with the continuous expansion of the scale of enterprises, more and more asset items are becoming more and more finer.

At this time, subject code or increase the number of columns, such as 411 represents workshop, 412 represents land, etc., or enlarges the number of code, adopts four bit code, such as 4100 represents workshop, 4101 represents land, etc., the advantage of this design is that no matter how large the company is, the basic meaning of accounting code is interlinked (for example, the tangible fixed assets code starts with 41 at the beginning of an accountant, and once accepted the accounting training, any enterprise can apply what he has learned.

(three) simplified financial reporting.

In order to meet the increasing information needs of users, the information content disclosed in financial reports under the old conceptual framework is more and more abundant, and the complexity and incomprehensible possibility of reports are also increasing.

For most of the users of financial reports who are trained at the end of the traditional small and medium-sized enterprises, the complicated language and structure are beyond their comprehension ability, and excessive information makes them unable to use them.

In view of this situation, simplified financial report is undoubtedly a good medicine.

Simplified financial reporting is a response to the needs of differential reporting. It consists of a large number of condensed financial statements and general financial reviews. In the form of report summaries, when the content is too complex, users can not read and study all contents in detail, it helps users to reduce the time of searching related information and to understand financial information more easily.

Different from the traditional financial reports, its main characteristics are as follows: (1) only reflect the business cost and financial situation of enterprises; (2) the contents of the notes are few.

Simplified financial reporting has been widely used in many countries in the world, such as the United Kingdom, eligible SMEs can provide simplified accounting information, and small companies only need to provide simple balance sheets and statements annotations, and exempt from the preparation of cash flow statement.