How To Identify True And False Accounting Statements?

< p > < strong > 1. in order to "a href=" http://www.91se91.com/news/index_c.asp > performance appraisal < /a > whitewash accounting statements < /strong > /p >

< p > the performance of an enterprise is usually based on financial indicators, such as the completion of profit (or loss) plans, the rate of return on investment, output value, sales revenue, the value added rate of state-owned assets, the turnover rate of assets, and the profit rate of sales. These are all important assessment indicators for business performance.

The calculation of these financial indicators involves accounting data.

In addition to internal assessment, external assessment, such as industry rankings, is also determined mainly based on sales revenue, total assets and total profit.

< /p >

< p > the evaluation of business performance involves not only the evaluation of the overall management of the enterprise, but also the evaluation of the management performance of the manager and the promotion, bonus and welfare of the manager.

In order to score more on business performance, it is possible for enterprises to pack and whitewash their accounting statements.

It can be seen that Whitewashing Accounting Statements based on performance appraisal is the most common motivation.

< /p >

< p > < strong > 2. to whitewash accounting statements < /strong > < /p > in order to obtain credit capital and business credit.

< p > as we all know, under the market economy, banks and other financial institutions are generally unwilling to lend to loss making enterprises and enterprises lacking credit because of their risk considerations and self-protection needs.

However, capital is one of the four elements of the market competition (product quality, capital strength, human resources, information resources).

In China, enterprises are generally faced with a shortage of funds.

Therefore, in order to obtain the credit funds of financial institutions or other suppliers' business credit, enterprises with poor performance and imperfect financial situation are bound to dress up their accounting statements.

< /p >

< p > < strong > 3. to whitewash accounting statements < /strong > < /p > for issuing shares.

< p > stock issue is divided into first issue (IPO) and subsequent issue (rights issue).

Under the circumstances of IPO, according to the provisions of the company law and other laws and regulations, enterprises must make profits for three consecutive years, and their business performance should be more prominent before they can be approved by the SFC.

In addition, the determination of the issue price is also related to profitability.

In order to raise more funds and create good performance image, enterprises often whitewash accounting statements when designing stock reform plan.

< /p >

< p > under the subsequent issuance, it is necessary to comply with the < a href= "http://www.91se91.com/news/index_c.asp" > rights issue < /a >. The net assets return rate of the enterprise in the past three years must be above 10% every year.

Therefore, 10% of the rights issue has become the "lifeline" of the listed company.

Statistics show that in XX, 755 listed companies had a net assets yield of 10% to 11% as high as 211, accounting for 28%. Therefore, the motive to whitewash accounting statements for the rights issue is no less than IPO. < /p >.

< p > < strong > 4. in order to reduce taxes, whitewash < a href= "http://www.91se91.com/news/index_c.asp > > accounting statement < /a > /strong > /p >

< p > income tax is based on accounting profits, by adjusting taxes, adjusting accounting profits to taxable income and multiplying the applicable income tax rate.

Therefore, enterprises tend to whitewash accounting statements based on tax evasion, tax evasion, reduction or delaying tax payment.

Of course, there are a few state-owned enterprises and listed companies, based on the purpose of raising funds and manipulating stock prices, sometimes even at the expense of fictitious profits, paying more income tax to prove their profitability.

< /p >

< p > < strong > 5. whitewash accounting statements < /strong > < /p > for political purposes.

< p > the reform of state-owned enterprises has entered a critical stage. The CPC Central Committee and the State Council attach great importance to it and strive to make state-owned enterprises out of difficulties for three years.

In a sense, it is a political task for state-owned enterprises to turn losses into profits and create good business performance.

For the manager of a factory manager, it may be a bright career to complete this task, otherwise it may be difficult to protect jobs or even lay off workers.

Under such political pressure, state-owned enterprises are likely to whitewash accounting statements.

< /p >

Besides, P, the mayor and director of many places choose from the director and manager of large state-owned enterprises.

In order to show their talents and reflect their achievements, factory directors and managers have the motive to whitewash accounting statements.

It is not difficult to find that once a CEO of a company is promoted to mayor and director, the successor will have to spend several years to digest the heavy historical burden left by the manager of the factory because of whitewashing accounting statements.

< /p >

< p > < strong > 6., to whitewash accounting statements < /strong > < /p > to shirk responsibility.

< p > performance: (1) the departure audit of senior management is generally exposed.

In order to clarify responsibilities or shirk responsibilities, the new general manager often cleaned up old debts in a big way.

(2) when accounting standards and accounting systems undergo significant changes, such as the implementation of Limited by Share Ltd accounting system, it may induce listed companies to whitewash accounting statements, digest potential losses ahead of time, and blame the new accounting standards and accounting systems; (3) enterprises may also whitewash accounting statements when natural disasters occur, or when senior managers are involved in economic cases.

< /p >