Complementary Disclosure Techniques For Pnational Financial Reporting

Transnational financial reporting refers to the company's financial statements compiled to satisfy the needs of users of more than two countries.

The purpose of its compilation is mainly based on the following three aspects: (1) to provide foreign investors with financial information for smooth international financing; (2) to establish a good image of international investors; (3) to maintain good cooperation with host governments.

Due to the fact that the financial reports of various countries often adopt their own accounting principles or guidelines, they can not fully meet the requirements of some multinational financial reporting requirements (such as investors, creditors and host governments of pnational corporations). Therefore, how to disclose the financial and business performance of pnational financial reports and pmit them to users of accounting information in different countries has become a major technical problem facing international accounting.

For this reason, many companies use appropriate pnational financial reports to supplement and reveal technologies so as to enable multinational financial reporting to be understood, accepted and utilized more effectively by all parties concerned.

These supplemental disclosure techniques include: "1" and "under the table". Some countries allow multinational companies to prepare financial reports in accordance with the accounting standards of the country where their parent companies are located, but at the same time, the difference between the accounting standards of the two countries must be noted in the annotations of the statements and their impact on the reporting data.

The United States, France, Belgium, Japan and other countries have made such regulations for foreign companies.

2, appropriate plation and plation. Translation is the plation of the language of financial report into the national language of the main foreign report users.

For example, a multinational company in the United Kingdom plates financial reports sent to French shareholders into French, or sends French plations together with the original English to the French shareholders.

In addition to plating the language, some companies also convert money into currencies, that is, at the end of the reporting period, all of them are converted into monetary amounts in the countries where the reporting users are located.

The results of the conversion are shown in two ways: one is only the amount shown after the conversion; the other is to set up two amount columns, showing the amount of the original currency before conversion and the amount of foreign currency converted after that.

There are also companies in some countries that do not plate or convert reports to foreign readers.

For example, many American companies do this because they think that the US accounting and financial reporting standards are the most reasonable in the world. English is the world's prevailing language, and the US dollar is also the most important hard currency in the world. Therefore, there is no need to plate, convert or restructure financial reports.

French companies are only willing to provide financial reports reflected in French and francs because of their strong national attitudes.

3, provide special information. In view of foreign investors may not be able to grasp and use other countries' current accounting standards and principles, some multinational companies provide foreign statements users with descriptions of their accounting statements.

For example, Sweden's Astra company, with its English version of the Swedish annual report, attached an English manual, entitled "explanation of financial statements in Sweden" to non Swedish users of the report, explaining the principles and characteristics of its annual report, so that foreign users can get a better understanding of its statements.

Unfortunately, this practice is not common.

In order to make up for the shortage of reports only through the plation of language, some multinational companies restated a part of their reports in accordance with the accounting standards and forms familiar to foreign users in accounting reports so as to enable foreign readers to obtain relevant information in order to make up for the shortage of 4.

There are two main forms of adoption: (1) a multinational company must coordinate the income statement compiled according to its national accounting standards to the net income of the income table compiled according to the accounting standards of foreign readers; (2) a multinational company must recalculate several selected financial statements according to the accounting principles of the country where the reader is located.

For example, when Philip plated the financial report into English, the company in Holland specialized in rewriting the statement of shareholders' equity in its balance sheet according to the generally accepted accounting principles of the United States.

This will enable Holland investors or other readers of accounting reports to understand the reports consistent with their local practices, and enable North American readers to have a clear understanding of the rights and interests of shareholders at least, and can be used for comparison.

However, the restatement of financial statements often changes the financial ratios of the original statements, thereby weakening the comparability of the financial statements.

5, supplemented by the preparation of supplementary financial statements, such as AISG, was put forward in the February 1975 international financial report by the CPA international research group.

The report recommends that multinational corporations prepare two sets of financial statements, namely, basic financial statements and supplementary financial statements.

The former is compiled according to the accounting standards of the company's original country and the written language of the country; the latter is specially compiled for readers from other countries.

The auxiliary financial statements have the following characteristics: (1) follow the financial reporting standards of a foreign country; (2) the amount of the statement should be plated into a foreign currency; (3) the language of the report should be plated into a foreign language; (4) the audit report should be expressed in accordance with the auditing standards of a foreign country.

At present, this practice has been adopted by multinational corporations in some countries.

The advantages of this method are as follows: (1) the accounting system has recognized the accounting opinions and other countries' accounting viewpoints, and the readers have gained more information from them to help them make the correct investment decisions; (2) it is conducive to the international coordination of accounting; (3) the multinational corporations that are good for making good achievements have set up a good image, thereby reducing the cost of raising funds.

6, the international accounting standards board (IASC) is working hard to form a worldwide applicable accounting standard in an attempt to eliminate the "unnecessary" differences in accounting standards all over the world.

This method attempts to go beyond the accounting standards of a country and applies to the worldwide information users. Therefore, it is not necessary to prepare separate annual reports for different country readers, and to compile a set of financial statements is enough to meet the needs of all the users of information worldwide.

7, concluding remarks (1) in the development of contemporary international accounting, people pay more and more attention to the research of financial reporting.

The United Nations has set up three expert working groups since the middle of 1970s. Each time it is named after Accounting and Reporting. In the masterpiece of comparative international accounting, Parke and his colleagues used the financial report as the central concept to discuss the international coordination of accounting. The Accounting Standards Committee (ASB), which was reestablished in 1990, referred to the guidelines issued directly as "financial reporting standards".

Therefore, in this context, it is very meaningful to explore the complementary and revealing technology of pnational financial reporting.

2, although the organization such as the International Accounting Standards Committee has done a lot of work, there is no set of accounting standards that can be accepted by all countries and put into practice.

Moreover, it is increasingly clear that changes in accounting recognition and measurement rules are much more difficult than in accounting reports.

Therefore, many efforts to make accounting internationalization have met with setbacks.

However, it is this setback that urges people to ask for more and better multinational financial reporting.

A company can be more international if it does not abandon the "foundation" of its national accounting, and makes supplementary disclosure of financial reports.

Supplemental disclosure of pnational financial reporting should be a realistic solution to the current international accounting dilemma.

The 3 points need to be pointed out that the complementary and revealing technologies of the existing pnational financial reports are not perfect. They must be cautious in dealing with the limitations of these methods.

The most effective way to overcome these limitations is to increase disclosure, that is, increase the difference in accounting standards among countries, the causes of differences, and the impact of differences.

From the increasingly important position of pnational financial reporting and the development of international coordination, the development direction of China's accounting standards should be to standardize the company's financial reporting, and to actively study its supplementary disclosure technology while making provisions on accounting results, so as to make the output of financial accounting, as far as possible, conform to international practice.