There Is No Trivial Matter In The Revenue Recognition Of The 72Nd Period Of Shenzhen Supervision And Administration: The Way And Tricky Of The Total Amount Method And The Net Amount Method

As a result of business transactions such as selling goods or providing labor services, income is the source of enterprise economic benefits inflow and an important judgment index of enterprise growth and profit. Based on this, the income standard constitutes the basic system for standardizing the recognition, measurement and reporting of enterprise income.

The year 2020 is the first year for the new income standard to be fully implemented in domestic listed companies. The reporter noted that most companies can prudently and comply with the new income standards to confirm the measurement of income, but some companies have implementation deviation, and may even abuse it in an attempt to "muddle through". At present, three Shenzhen stock market companies, such as feilida, have been taken regulatory measures because they did not confirm their income according to the net amount method.

In this issue, the total amount method and the net amount method, which are focused on by the industry, are taken as the breakthrough point in this issue.

The new "income standard" clarifies "three signs"

The new income standard clarifies the judgment principles of the total amount method and the net amount method, and emphasizes that enterprises should distinguish whether they have the right to control the goods before transferring them to customers, and should take the main responsibility for transferring the goods to customers, whether to bear the inventory risk of the commodities, and whether they have the right to determine the prices of the commodities they trade, It is necessary to judge whether the person in charge is the principal responsible person or the agent when engaging in the transaction, so as to use the total amount method or the net amount method.

For example, Shiji Dingli analyzed the "three signs" when determining the total amount or net amount of its IT product distribution business. In this business, the company purchased computers from manufacturers and sold them to downstream agents. The suppliers assumed the main responsibility of transferring goods to customers. As the general distributor of computers, the company has the right to set prices and sell independently in the computer sales business, The company does not bear the inventory risk of commodities, and does not acquire the control right of commodities in the transaction process. Based on the principle of prudence, the company and the audit institution adopt the net method to calculate the distribution business of IT products.

However, it is impossible for the rules to enumerate all the judgment situations. The "three signs" are the main criteria for judging whether or not they have the right of commodity control, but they are not the only one. In practice, we still need to analyze specific issues according to the principle that substance is more important than form.

At the beginning of the year, the Ministry of Finance issued the notice on strictly implementing the accounting standards for business enterprises and effectively strengthening the work of the annual report of enterprises in 2020. It emphasized that when enterprises judge whether they are the main responsible person or the agent, the "three signs" are only to support the evaluation of control rights, which can not replace the evaluation of control rights, nor be superior to the evaluation of control rights, let alone or additional evaluation.

Compared with the "old income standard", the new standard for the total amount method and the net amount method has been further clarified, but in the actual implementation process, there are still cases of intentional abuse, which puts forward higher requirements for the judgment ability and professional ethics of the company and audit institutions.

Inadequate trust conceals misuse motives

According to relevant regulations, listed companies should disclose "the accounting policies adopted for revenue recognition and measurement, as well as the judgment that has a significant impact on the time point and amount of revenue recognition". However, some annual reports of listed companies only disclose simple business descriptions and the conditions to be met for revenue recognition of different products, It is impossible to judge whether the company controls the commodities, whether it is the main responsible person, and the appropriateness of adopting the total amount method or the net amount method. Only in the correction of accounting errors and the inquiry and reply of the annual report, more business details and judgment process are disclosed.

If easyst purchased such goods in the communication equipment and materials business and sold them to the outside world, at the initial stage, the company considered that due to the credit risk of such goods, it adopted the total amount method to recognize the revenue. Subsequently, it was found that the company did not bear the inventory risk of the commodity before the transfer of the commodity, that is, it had insufficient control over the inventory, Income should be recognized according to the net amount method.

In addition, some listed companies deliberately misuse the total amount method to increase their income scale, so as to achieve specific goals, or avoid the delisting index of "the lower net profit before and after deduction is negative and the operating income is less than 100 million yuan".

For example, in the 2020 annual performance express, St tianshouyuan predicted that the annual operating revenue would increase to 115 million yuan due to the new potash fertilizer trade business. However, 10 days later, after pre audit by the audit agency, the company's potash fertilizer trade income was confirmed by the net method, and the operating income in the performance forecast was finally revised to 7.395 million yuan.

Income recognition should be cautious

In the first accounting year when the new income standard is fully implemented in domestic listed companies, the issue of revenue recognition measurement naturally becomes the focus of attention of listed companies, market and regulatory authorities.

For example, in order to further standardize the use of the total amount method and the net amount method, China Securities Regulatory Commission (CSRC) issued the "guidance on the application of regulatory rules - accounting class No. 1" on November 13, 2020, which specifically put forward relevant opinions on how to apply the total amount or net amount recognition principle to specific matters such as the joint venture mode of the retail department store industry and the entrusted processing by the purchase and sales contract. Renrenle, Xujiahui, Hefei Department store, pulutong, Haima automobile and other companies have revised the total amount method to the net amount method for relevant business accounting before the disclosure of the annual report in 2020, and accordingly corrected the previous financial statements.

At the same time, in order to ensure the smooth implementation of the delisting reform and prevent listed companies from abusing the total amount method to increase their income scale and avoid delisting, the regulatory authorities have started the supervision and inquiry on the rationality of income recognition methods in the stages of annual performance forecast and annual report review.

For example, * ST Tianshou, * ST shenglai, * ST Tianlong and other companies with revenue around 100 million yuan have paid close attention to and inquired about the rationality of the recognition methods for new trade, sales cooperation, engineering subcontracting, and year-end surprise revenue generation before the annual report is disclosed. According to incomplete statistics, 37 of the annual report inquiry letters issued by the Shenzhen Stock Exchange involve the application of the total amount method or the net amount method.

With the increasing complexity and innovation of listed companies, higher requirements are put forward for the accurate and appropriate use of accounting standards. For example, the application of the total amount method and the net amount method requires a more complex evaluation of the main responsibility, inventory risk, pricing power, control right, etc.

In this regard, on the basis of strengthening the study of standards and relevant cases, listed companies need to continue to strengthen communication with audit institutions, give full play to the professional advantages of audit institutions, and ensure the rationality and compliance of accounting treatment. The listed companies that deliberately evade supervision and mislead investors by changing net amount into total amount will not only face "heavy tests" such as key inquiries and on-site inspections by regulatory authorities, but also face the risk of administrative punishment.

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