Characteristics And Changes Of China'S Accounting System

I. the nature of accounting system

According to North, an important representative of the new system economic school, "system is a game rule of a society, and more standardized, they are some restrictions artificially set for determining the relationship between people" (North, 1994).

In essence, the accounting system is also a criterion for regulating social relations between people.

Whether it is accounting law or accounting standards, accounting practices, or internal accounting system, in terms of its essential functions, it is a rule to regulate the economic relationship between people.

Therefore, like other social systems, the accounting system also has the nature of public goods, and the formulation of accounting system is also a public choice process under the condition of conflict of interests.

The consumption of accounting system is both exclusive and mandatory.

Especially in China, accounting system is mostly manifested in the nature of laws and regulations, and its mandatory consumption characteristics are more obvious.

However, the identification of the nature of accounting standards with external characteristics of technical specifications is not a simple matter.

So far, there are three representative views on the nature of accounting standards by foreign scholars: (1) accounting standards are a technical means; (2) accounting standards have economic consequences; (3) the formulation of accounting standards is a purely political process (Liu Feng, 1996).

Xie Deren, a young scholar in China, thinks that the nature of accounting standards is that it is a public contract on general general accounting rules (Xie Deren, 1997).

In my opinion, accounting standards are regarded as a purely technical means. They only see the external form of the technical specification presented in the implementation process of accounting standards, but have not paid enough attention to the formulation process and implementation consequences of accounting standards.

In fact, as a kind of public goods, the formulation of accounting standards is a process of public choice under the conditions of conflict of interests of all parties, and even to a "politicized procedure".

To adapt to this, the implementation of accounting standards will have "economic consequences" that affect information users' decisions and affect the distribution of economic interests among the relevant stakeholders.

The second point of view, though seeing the "economic consequences" of accounting standards, does not clearly answer the question of "what is the accounting criterion", that is, it does not summarize the basic attributes of accounting standards.

The third point emphasizes the politicized procedural characteristics of the accounting standards making process, but the "political procedure" is only the characteristics shown in the formulation of accounting standards, rather than the nature of the whole process from the formulation of criteria to the implementation of norms.

I agree with Dr. Xie Deren that accounting standards are public contracts.

Because accounting standards as a public contract can better explain the accounting standard formulation, implementation and implementation consequences of systemic characteristics.

However, I want to emphasize that accounting standards as a system of standardizing accounting behavior, though also a social contract formed through the struggle of various interest groups, has its own characteristics compared with other social systems.

This feature is mainly reflected in its mechanism of action.

Generally speaking, as a social mechanism, the system often defines the behavior space of individual or organization and its responsibilities and rights, directly restrains the behavior of the interest body to realize the regulating function of the interest relationship between people.

For example, the tax system directly constrains the behavior of taxpayers, tax authorities and other parties, and regulates the interest relationship between taxpayers and the state. The credit system directly controls the behavior of the borrowers and borrowers, thereby regulating the interest relationship between the borrowers and so on.

In contrast, accounting standards do not directly constrain the economic behavior of relevant stakeholders, but indirectly achieve the function of regulating economic interests between people by providing technical specifications for accountants to restrict accounting activities of accounting entities and ensuring accounting information systems provide relevant and reliable financial information.

This is the reason why people tend to regard accounting standards as a purely "technical means".

However, pure technical specifications, such as a large number of production technology standards, do not have the function of regulating the relationship between people.

It is not difficult to see that as an institutional arrangement, accounting standards differ from other institutional arrangements in that they provide technical standards for accounting information processing to reduce the paction cost of accounting information users to collect, verify and make use of accounting information, so as to reduce uncertainty and achieve the function of regulating interest relations between people.

Two, the characteristics of China's accounting system changes

The characteristics of the changes of China's accounting system can be grasped from three aspects: first, the characteristics of the accounting system changes in China compared with the changes in accounting system in foreign countries, especially in the mature countries of the market economy; two, the characteristics of the accounting system changes since 80s compared with the major accounting system changes that occurred after the founding of the people's Republic of China; and three, the characteristics of the changes in accounting system compared with the changes in other economic systems.

Next, we carry out specific analysis and generalization according to this idea.

1. the government is the main supplier of the system.

Accounting laws of any country (including specialized and non specialized) are made by the state and therefore have the nature of the state.

However, as the core component of the accounting system, accounting standards vary widely in different countries or regions.

In practice, there are mainly two modes of government supply and non-governmental occupational organizations (or institutions). In addition, some countries are jointly provided by the government and the private professional organizations.

The United States and the United Kingdom are representatives of the supply pattern of the non-governmental professional organizations, while France is the representative of the government's supply mode.

The accounting system of our country always regards the government as the main supplier.

Considering that accounting standards involve many technical problems, accounting methods and accounting information quality are related to the economic interests of the relevant stakeholders. Although the Advisory Group of experts has been set up in China's accounting standards setting process and widely consulted before the formal promulgation, the main body of the supply of accounting standards in China is still the government, which is a typical representative of the government supply model.

There are three main reasons for China's insisting on the government as the main body to supply accounting standards:

(1) institutional heritage.

The formulation of the system itself is also a system arrangement.

Our country has implemented the planned economy system for a long time, and the role of the system supplier has always been played by the government.

In particular, the accounting system, whether the national unified accounting system, or the industrial and regional accounting system, is formulated by the relevant government departments.

As a system arrangement, the institution making procedure itself has been accepted by the society. Moreover, the institutional arrangement has been clearly stipulated in the accounting law.

(2) as the main supplier of accounting standards, the government can guarantee the authority and timeliness of the criteria.

Because the government represents the state, the government is more authoritative in formulating accounting standards than private professional organizations.

In addition, because the government set accounting standards can reduce paction costs in the process of making, shorten the formulation process and implement the promotion process, so that it has better timeliness. This timeliness is very necessary in China's rapid economic restructuring.

(3) in large and medium-sized enterprises and listed companies, the dominant position of state-owned and state holding enterprises is also an important reason for the government to formulate accounting standards.

As with other institutional arrangements, the accounting system involves the economic interests of all parties concerned. In state-owned and state holding enterprises, the state is the best interests of enterprises. Ensuring national interests is an important reason for the government to formulate accounting standards.

2., the implementation of the system is mandatory.

There are two basic types of institutional change: induced institutional change and mandatory institutional change (Yifu Lin, 1994).

The former refers to the system innovation initiated by a group of people who spontaneously advocate, organize and practise in response to the profit opportunities caused by the unbalance of the system. The latter refers to the change or substitution of the existing system caused by the government's order or the introduction and implementation of the law.

Due to the institutional heritage of China's accounting system, coupled with the rapid economic restructuring and opening up to the outside world, especially the rapid development of the capital market, it is urgent for the accounting system to change at the shortest time and at the fastest speed.

Against this background, the mandatory change of accounting system has become a logical choice.

The advantage of the mandatory accounting system is that it can make use of the advantages of the government's coercive force and the potential of violence to reduce the cost of institutional change.

However, the limited rationality of government, conflict of interests among groups and insufficient knowledge preparation may affect the effect of institutional change.

For example, the mandatory operation of the accounting system may be contrary to the interests of some people who may not act according to the system, which will reduce the system.

3. the process of institutional change is gradual.

According to the general standard of classification of reform methods, we should not only include the goals and procedures of reform, but also the rate of reform.

Accordingly, the author believes that the change of China's accounting system should be a gradual change.

Its main characteristics are: gradually advancing, step by step in place, easy to make after difficult, first trial and then promotion.

From the October 1980 National Accounting Conference, the accounting reform was put forward. In October 1984, the national accounting work symposium put forward the idea of accounting reform (Draft) and the outline of accounting reform (Trial Implementation); from the accounting system of the pilot enterprises of joint-stock enterprises, the accounting standards for enterprises (Basic accounting standards), to the Limited by Share Ltd accounting system and the specific accounting standards promulgated, and from 1985's accounting law to the two accounting law revised in the future.

All these institutional changes can be seen that the whole process of accounting reform in China is carried out in "learning by doing" and "crossing the river by feeling the stones".

In the process of accounting reform, through the pilot projects of enterprises with different ownership, different forms of organization and different modes of operation, especially in the new economic sectors or new organizational forms such as foreign-invested enterprises, joint-stock pilot enterprises and listed companies, the new accounting system should be first implemented, and experience gained, and then the omni-directional change of accounting system should be promoted.

The gradual change of China's accounting system is determined by the characteristics of the accounting system and China's national conditions.

Accounting plays a very important role in the development of the economy, but from a deeper perspective, the development of accounting always depends on the change of the economic environment. As an integral part of the economic system structure, the accounting system is in a supporting role and highly dependent on other institutional arrangements.

In the pition of China's economic system, it must serve and obey the requirements of the reform of the whole economic system.

The whole economic system reform in China is carried out in a gradual way, which determines that the change of accounting system can only be gradual.

It is obviously unrealistic to expect all accounting principles, accounting procedures and methods to achieve an ideal state in the short term.

The advantage of progressive institutional change is that because of "learning by doing" and "first trial and then Popularization", we can get the system to replace or pform the information needed by step by step, and gradually accumulate the knowledge needed for change, thereby reducing the uncertainty and incompleteness of information, reducing social resistance and reducing the cost of mocha.

Of course, gradual change also has its drawbacks.

(1) the relevant institutional arrangements are not synchronized, which may lead to structural imbalance, especially the friction and conflict between the old and new institutional arrangements, resulting in the loss of efficiency.

For example, the accounting system, the basic accounting standards, the specific accounting standards, the industry accounting system, the shareholding system (pilot) enterprise accounting system often appear contradictions in China's accounting system structure, thus reducing the efficiency of the system.

(2) institutional supply and relative institutional demand often lag behind, causing the system to be neutral and manipulating accounting for some enterprises.

(3) "learning by doing" has made accountants learn some knowledge of "short duration", which, to some extent, has increased the learning cost of the whole process of change.

For example, the knowledge compiled by the accountants who had just grasped the statement of changes in the financial situation in 1993 would not be so useful in 1998, and they must relearn the knowledge of preparing the cash flow statement.

4. capital markets and international practices have a guiding role.

Compared with the previous accounting system changes after the founding of the people's Republic of China, an important difference is the difference in orientation.

The change of accounting system before 80s is generally focused on serving a highly centralized and unified planned economic system, that is, establishing a centralized and unified accounting system as the goal of institutional change.

Accounting information is only for macro economic planning management and internal management services. The goal of accounting system change has not been considered in connection with international practice.

Because there was no real capital market at that time, the guiding role of the capital market could not be mentioned.

The economic reform and opening to the outside world at the end of 70s and early 80s brought about the rapid development of capital market and the continuous improvement of economic internationalization.

Therefore, the establishment of an accounting system that fits the requirements of the socialist market economy, which is in line with China's national conditions and is well coordinated with international practice, has become the objective of this accounting system change.

To adapt to the requirements of the socialist market economy, to some extent, we must adapt to the requirements of the development of China's capital market.

In fact, it is the development of capital market that gave birth to China's accounting standards.

The modern capital market is built on the basis of information disclosure, and the core content of information disclosure is financial information. Timely, relevant and reliable financial information is a necessary condition for the healthy and orderly development of the capital market.

The guiding role of the capital market can be seen from the timing of the emergence of China's accounting standards and the time sequence and contents of the specific accounting standards promulgated.

Integrating with international practice is an important part of the change of accounting system and an important guide to the change of accounting system.

The internationalization of capital market and trade will inevitably require accounting as a business language to improve its consistency.

Only in this way can we improve the international comparability of financial information and provide information support for rational allocation of capital, reduction of market risks and financing costs.

The international accounting standards are playing an increasingly important role in international accounting coordination.