On The Information To Be Disclosed In Financial Accounting Report

Since entering the twenty-first Century, with China's entry into WT0, the economic activities of enterprises are becoming more and more complicated.

The existing financial accounting reports of enterprises are lagging behind the changes in the environment, showing their shortcomings and deficiencies.

For example, financial reports only focus on history, do not pay attention to the future, only pay attention to monetary information and ignore non monetary information, only reflect the results of enterprise economic activities without reflecting the impact of economic activities on the society and environment, and are increasingly affecting the relevance of financial reporting.

One of the foundations of financial reporting is usefulness, that is, providing useful information to the interest groups or users who are interested in accounting information.

If financial reports fail to provide useful information for these information users, the rationality of the existence of financial statements must be questioned.

I believe that in order to improve the effectiveness of financial report content, we must increase the disclosure of accounting information in the following aspects.

Knowledge and capital information.

Knowledge is the most basic, important and core element of knowledge economy.

In the future, the competition of enterprises will no longer be simply the competition of material wealth and scale of enterprises, but the overall competition of knowledge capital in terms of quality and quantity.

The limitation of the current financial report that focuses on information disclosure on physical assets such as inventory, machinery and equipment has been increasingly revealed. This is mainly manifested in the fact that the correlation between the value of physical assets and the ability of enterprises to create future cash flows is weakened, and even the correlation with the current market value of enterprises is also reduced.

Because knowledge capital occupies a pivotal position in the survival and development of enterprises, financial reports should reflect knowledge capital information.

Knowledge capital information mainly includes enterprise intangible assets and human capital information, human resources information and so on.

Intangible assets of enterprises refer to intellectual property, advanced technology, patents, brand value and goodwill owned by enterprises. If they can not be accurately measured in the statements, they should disclose other information through other means.

Traditional financial reports neither reflect the value of human resources nor reflect human capital, thus underestimating the total assets of enterprises and neglecting the economic contribution of workers to enterprises.

Therefore, in the future financial report, we should fully disclose and disclose the very important assets and related rights and expenses of human resources.

To solve the problem of human resource information disclosure, we need to further study the theory and method of human resource measurement, and further involve the confirmation of human capital, and the distribution of benefits arising from it.

Two, income and risk information generated by derivative financial instruments.

With the financial innovation, there are more and more kinds of derivative financial instruments, such as futures and options, which have no actual pactions and are only rights or obligations of future economic interests.

In recent years, some banks and securities companies have launched a number of new "combinatorial" derivatives, such as "capping, protecting the bottom", "strengthening", "swap options", and "exchange rate remittance".

Such derivatives may cause drastic changes in the financial position and profitability of enterprises in the future.

The innovation of financial instruments calls for the innovation of financial accounting reports.

If the risk of such derivatives is not disclosed, it will pose a potential risk to users of financial reports, which is likely to cause financial reporting users to make mistakes in investment and credit.

Although the capital market in China is not mature at present, derivative financial instruments are rare, and the impact on enterprises is not large. However, we should also carry out research in this area as soon as possible in order to match the development and perfection of China's capital market.

Reflecting the quantity, value, risk and future earnings possibility of the enterprise's derivative financial instruments will be one of the important contents reflected in the financial report.

Three information about dilution of shareholders' rights and interests.

With the development of securities market, shareholders are very concerned about the market value of stocks.

Because the book value of a company's stock is often quite different from the market value of the stock, and the market value of the stock is higher than the book value of the stock (especially in the A share market of our country), this provides the company operator with the opportunity to increase profits through the way of equity swap.

For example, if a company issues convertible bonds, it can reduce bond interest by lowering the conversion price, and the interest cost reduced due to reduced interest rate will be pformed into corporate profits, so that the profits of enterprises can be increased.

On the other hand, the difference in the conversion price below the stock market price will lead to the dilution of the equity of the original shareholders and the loss of the original shareholders.

Therefore, it can be said that the company's increase in profit is based on the dilution of the rights and interests of the original shareholders.

Whether this is good or bad for the original shareholders of the company is not reflected in the current financial accounting.

It reflects only the increase in profits due to the decrease in interest expense, excluding the accounting of the former shareholders' rights and interests.

This will inevitably mislead investors to affirm the behavior of issuing convertible bonds, making it easier to make decisions that are detrimental to their own economic interests.

Therefore, it is necessary for the financial reporting to be improved in this area to provide information on dilution of shareholders' rights and interests.

Four, the information of comprehensive income of enterprises.

Accounting income refers to the difference between the realized income and the corresponding cost derived from the paction during the reporting period, and its confirmation must follow the principle of realization.

Traditional gains do not confirm the unrealized gains caused by changes in market prices or expected prices, which makes the income statement unable to accurately reflect all the profits of the enterprise during the current period. Moreover, the unrealized value added is placed outside the income calculation, resulting in the lack of logically consistent income calculation, resulting in the wrong proportion of the proceeds from the sale of assets and the related costs.

In the case of relatively simple economic activities and small changes in the value of money, the traditional accounting earnings and the overall income have little difference. The users of financial reports can make more correct decisions with traditional benefits.

But with the complexity of economic activities and the frequent changes in the value of money, the difference between the above two kinds of income is increasing.

In this way, if making decisions based on traditional accounting income, it is possible to make wrong decisions.

A comprehensive income is defined as a change in the rights and interests (net assets) caused by all reasons except a paction between the owner and the owner (shareholder investment and dividend distribution) during the reporting period.

Therefore, the total income should be divided into two parts: confirmed and realized net income and other gains and losses that have been recognized but not realized.

Such as unrealized property revaluation surplus, unrealized business investment gains (losses) and so on.

In China, it is of great practical significance for enterprises to disclose comprehensive income in China. This is because: (1) the market value of assets in China has changed greatly. Some enterprises, especially the old ones, have a very wide disparity in the real value of assets and the book value of accounting assets. This discrepancy must be a kind of expected profit and loss, revealing it to reflect the income situation of enterprises more comprehensively and truthfully, which is conducive to the decision-making of investors and credit people.

(2) it can effectively curb the manipulation of profits by enterprises.

The conversion of unrecognized gains or losses through such methods as asset replacement into profit and loss is the most common way to manipulate profits. If we adopt a comprehensive income report, we can fundamentally eliminate the possibility of manipulating profits in this way, and make accounting information more realistic.

The comprehensive performance report is a very important content for enterprises, especially listed companies. We can learn from the advanced experience of other countries and choose the following methods: (1) expand the income statement to include all items of financial performance; (2) separate the establishment of the comprehensive income statement as a supplement to the traditional income statement; (3) merge with the statement of changes in equity, and jointly report the components of comprehensive income.

Five, enterprise's contribution to society.

The main body of the existing financial reporting service is investors and creditors. The content disclosed is mainly related to profitability and financial status related to investment and credit decisions of investors and creditors. In these statements, the real contribution of enterprises to society can not be reflected, that is, the added value or added value provided by enterprises, and can not reflect the distribution of contributions.

Today, with the democratization of political economy, the deficiencies of traditional financial reporting in this respect are increasingly prominent.

The dominating power gradually weakens, and the contribution ratio of human capital and intellectual capital is increasing. This requires financial reporting to serve these users. Second, the trend of democratization of political economy requires the governor of monetary capital to announce the contribution of enterprises to the society and the distribution of contributions, so as to facilitate the supervision of enterprises by society. Third, to announce the real contribution and distribution of enterprises to the society, is conducive to the coordination of labor and capital providers, and the relationship between enterprises and society and government, so as to play a positive role in resolving contradictions in profit distribution and increasing the resultant force in interest creation. Fourth. First, monetary capital.

Because of this, all countries in the world have added the value-added list as the fourth accounting statement after the balance sheet, profit and loss statement and cash flow statement.

Our country should pay close attention to the study of the theory of "value added list" and its compilation methods, and introduce relevant guidelines to bring the "value-added report" into our financial reporting system as soon as possible.

Six, enterprises consume natural resources and environmental impact information.

Enterprises are not only the creators of social wealth, but also the consumers of natural resources and the main polluters of the environment. They are closely related to the environment.

Financial reports should disclose information about the operation of the company on the consumption of resources and the impact on the natural environment.

There are quite a lot of incentives to encourage companies to adopt environmental protection methods such as controlling pollution, using renewable resources, selecting renewable materials, developing circular economy and producing environmental protection products.

Research shows that the public's enthusiasm for environmental protection mainly affects the operation of the company from two aspects: on the one hand, the company may suffer direct losses for its actions, for example, they may be forced to pay for environmental losses by legal or presumptive coercion; or when they cause pollution, they have to pay extra taxes or financial penalties.

On the other hand, if an entity is believed to cause environmental pollution or other unethical behavior, it will cause considerable public hostility, which will lead to a reduction in customers.

On the contrary, the positive aspect may be: if an entity has a "green" image, it may attract more customers. That is why there are many brands of environmental brands nowadays.

Knowledge of the contingent liabilities arising from environmental factors, the cost of pollution control, the depreciation of asset values and other environmental risk losses affect information about the development of enterprises, and help investors, creditors and managers to make the right decisions.

The current financial accounting ignores the disclosure of information in this area, and is no longer suited to the increasingly demanding environmental protection and increasingly stringent social and economic situation.

Therefore, disclosure of information on enterprise environmental impact should be the content of improving financial reporting.

Seven forecast information on the future value of the company.

With the development and perfection of China's capital market, investors and potential investors need to understand the future development of enterprises.

At the same time, because there are some deficiencies in the experience, technology and understanding of the enterprise, the users of the report can not reasonably predict the future situation of the enterprise.

Although the prediction information lacks reliable guarantee, it can overcome the shortage of historical information and enhance the relevance between users' decision-making and evaluation, thus becoming an important aspect of information disclosure.

At present, China only requires listed companies to publish earnings forecast information in prospectus and public announcement.

How to disclose forecast information has different understanding and practice.

Theoretically speaking, the best form of disclosure is the complete prediction of financial reports.

But in fact, it is very difficult and difficult to compile accurate and complete forecast financial reports. In practice, many countries in the world only require listed companies to provide forecast data for earnings per share.

The compilation of a complete forecast financial report is not only technically difficult, but more importantly, it has no use value.

Because when people look at a company from their own interests, they will get different values because of their different attitudes towards income and risk.

In this case, it is not necessary for enterprises to prepare comprehensive forecast financial reports.

Disclosing the future value trend information of an enterprise should be the disclosure of information related to the future value of the enterprise as far as possible outside the table, including the future development of enterprises, profitability prediction, the vision of the management, the opportunities and risks faced by enterprises, the investment of enterprises, the market share of products, etc.