Defects And Reform Countermeasures Of Financial Disclosure System

The management of a case company is driven by interests, and it will damage the interests of investors. If auditors are driven by interests, they will ignore the interests of the trustees.

This article will comprehensively discuss this issue from the theory of enterprise system strategy, including financial disclosure system, audit system, and financial incident investigation system. It is precisely because of these imperfections that there is room for financial fraud.

The so-called institutional strategy (institutionalstrategy) is an activity mode related to institutional structure management in the process of resource competition, and it is an organization activity mode related to the formation and pformation of system, rules and standards (institutional environment).

We focus on the strategic response of the organization to the pressure of the system, and discuss the countermeasures against the shortcomings of the system.

1, networked business activities.

One of the most important characteristics of modern company operation is that the operation of a company is no longer isolated, but the group company it belongs to.

Or an integral part of shareholder management.

Even under certain circumstances, a new legal person should be formed for a specific purpose to achieve a specific financial or economic purpose.

Although there are normal economic reasons for network operation in reality, it is often abused and become an important means of financial fraud.

Enron uses special purpose entities to disguise the real financial situation. The case of Lernout in South Korea is a clear example.

Therefore, it is very important for investors and other financial reporting users to have a correct understanding of the real operating conditions of listed companies, and financial reports should be disclosed positively.

2. Intangible assets.

Intangible assets mainly include patents, origin, trademarks, proprietary technology, business information, unique organizational structure (i.e. supply chain), technology management system, human capital and so on.

The study found that the 80% of US stock is largely based on future value, including the value of intangible assets such as trademarks, goodwill, production capacity and so on.

According to the current accounting system, financial reports mainly reflect tangible property, which is mainly goods.

The increase in the value of intangible assets has attracted worldwide attention. The debate is focused on whether or not such assets are disclosed in the company's normal financial reports.

In the United States, the Institute of public accountants and the financial accounting standards committee are examining the language (Language) of the intangibles report. Denmark and Australia have taken the lead in recognition, and European countries have encouraged companies to give financial disclosure to specific aspects of intangible assets.

In fact, there are many commercial data, software selection and intellectual property evaluation companies abroad, which provide some patent information through professional analysis to determine the value of intangible assets.

In short, the reason why the current financial report does not disclose intangible assets is that the company's financial accounting system does not meet the needs of the knowledge-based economy.

Therefore, in order to prevent

In order to disclose the intangible assets of a company in financial reports, fraud must be modified by the existing accounting system and the intangible assets should be recognized in the balance sheet.

3, risk disclosure.

The traditional accounting system focuses on the assets, liabilities and the company's assets.

(mainly revenue and cash flow), which seriously ignores disclosure of business risk.

In the past twenty years, financial innovation has developed rapidly. In the economic field, many financial derivatives, such as debt securities, various forms of asset securities, employee stock privileges and so on, have emerged on the basis of hedging pactions and speculation, making the company and shareholders face more and more business risks, and it is difficult to predict and prevent them.

According to the current accounting system, predictable changes are not disclosed to investors, making it difficult for investors to correctly and comprehensively evaluate investment risks and returns.

In this regard, the most typical example is the first Pacific Bank in the United States.

Therefore, we need to rectify the current financial report and expand the scope of the report and disclose the company's financial operation in a comprehensive way.

The assets reported should include two aspects: tangible assets and intangible assets.