Strictly Prevent Accounting Estimates From Changing "Adjusted" Profits

In May 31, 2005, the group, which has been terminated, has issued a notice that the company's board of directors has decided to correct the accounting errors in the 2004 financial report. In the year 2004, the provision for individual bad debts is calculated on the basis of the normal collection of receivables, and the total amount of the impairment reserve is 50%.

In June 24, 2005, the company announced that according to the board meeting and the relevant provisions of the China Securities Regulatory Commission, the company made adjustments to the 2004 annual report. The specific adjustment is to prepare 192345668.35 yuan for the provision of bad debts on the company's receivables.

After the disclosure of the 2004 annual report, the company's shares were suspended, and the company took the above actions to clean up its performance in 2004 and ultimately lay the foundation for the company's resumption of listing.

Although the shares of the group were finally unfulfilled, the problems reflected were still worth pondering.

After the disclosure of the annual report, the listed company, based on the error of accounting estimates, corrects the previous accounting estimates and complies with the relevant regulations. Is it feasible to alter the financial situation and business results at the end of the year or the beginning of next year?

What is the difference between accounting estimate change and accounting error? In accordance with the accounting standards of enterprises, accounting errors refer to errors in accounting, accounting, recognition and recording.

The related concept is a major accounting error, which refers to an accounting error that is found by the enterprise that makes the published accounting statements no longer reliable.

Accounting estimation refers to the judgment made by an enterprise based on the most recently available information on pactions or events that are uncertain.

Because of the uncertainties inherent in business activities, some accounting items can not be accurately measured, but can only be estimated.

If the foundation of the estimation is changed, or because of the new information, the accumulation of more experience and the subsequent development and changes, it may be necessary to amend the accounting estimates.

When accounting estimates change, new accounting estimates should be adopted to deal with pactions or events that occurred during the current and future periods.

If the change of accounting estimate, if only affects the current period, the number of impact of the accounting estimate change should be included in the same items of the same period as the current change period and the previous period. If the impact of the change period is affected and the future period is affected, the impact of the accounting estimate change should be included in the related items of the same period in the current and future periods.

Unlike accounting estimates, the relevant accounting errors identified in the current period should be adjusted.

The non major accounting errors related to the previous period, such as profit or loss, should be directly included in the current net profit and loss. Other related items should also be adjusted in the current period. If the profits and losses are not affected, the relevant items of this period should be adjusted.

The major accounting errors identified earlier in this period, such as those affecting profits and losses, should be adjusted to determine the number of effects on the profits and losses at the beginning of the current period. The number of other related items in the accounting statements should also be adjusted at the same time. If the profits and losses are not affected, the number of relevant items in the accounting statements should be adjusted.

From the above provisions, we can see that the revision of the relevant estimates in the disclosure of annual reports is a change of accounting estimates rather than an accounting error correction. It should be reflected in the current or subsequent periods.

Three kinds of circumstances that distinguish the accounting estimate change: the eleventh rule of the enterprise accounting standard interim financial report stipulates: "the frequency of enterprise financial reporting should not affect the measurement of its annual results. Therefore, the interim accounting measurement should be based on the beginning of the year to the end of the current period.

If the accounting items of the previous medium-term accounting items in the fiscal year are changed in accounting in the later period, the amount of such accounting estimate changes should be reflected in the later medium-term financial statements, but the amount that has been reflected in the previous interim financial report is no longer adjusted.

We know that the information disclosure of listed companies is disclosed in the interim report according to the first quarter, half year and three quarter reports.

According to the foregoing regulations, the information disclosed in the end of the year or the beginning of next year can not be adjusted again, and only the future applicable law can be adopted. It will be implemented from the month of change, and can not be used as an accounting estimate change from the beginning of the year.

Analysis, in actual work, there may be other situations, which can be summed up in three cases after the disclosure of the accounting report after the disclosure of the periodic report: first, the accounting estimate of the board of directors and the management of the company is judged according to all informed information, and then the new information is corrected. The two is that the company's board of directors and management intentionally omit the relevant information, and only makes inaccurate accounting estimates for the related matters. Afterwards, it corrects the estimated estimates based on the information missed at that time. Three, it is found that in the process of supervision, the board of directors and the management should know the relevant information when conducting the accounting estimate at that time, and accordingly require the company to correct the relevant accounting estimates. This is from the perspective of general principles.

The author thinks that for the first case, the future applicable law should be adopted according to the requirements of enterprise accounting standards.

For the second case, if it is regulated only from a regulatory perspective, it can be treated as the first case as an accounting estimate change, and it is not allowed to be traced. It can only be implemented in the current and subsequent periods. The advantage of this is to prevent companies from correcting accounting estimates at will, thereby altering the disclosed financial information at will, and then affecting the company's share price, whether it will suspend the listing or even terminate the listing.

However, some people believe that if the company's board of directors is willing to correct the previous mistakes from the perspective of the actual situation, the company's initiative to correct the error opportunities, followed by good supervision is not equivalent to the concept of excessive supervision, which seems to be a major accounting error correction (accounting Ji Chacuo), and a retrospective adjustment.

The author believes that there must be relevant supporting measures in this way. Otherwise, it will be wrong to correct the mistakes as long as it is correct. It is not to act from a regulatory point of view, nor can it curb the company's behavior of arbitrarily changing accounting estimates.

For the third case, it is a corrective action taken by the authorities in the competent departments for deliberate violations of the company's actions and no initiative to correct them. It should be corrected and disclosed in accordance with the requirements of the competent departments and the CSRC's compiling rules.

It is learnt that the above matters have attracted the attention of the relevant departments. The change of accounting estimates at the end of 2005 or early 2006 is the adoption of the future applicable law, from the start of the month of change, or the correction of major accounting errors (accounting errors), and the adjustment of accounting estimates is not implemented as early as 2005.