Financial work summary

The most and most critical criticism of the current financial report is its relevance. The current financial report only focuses on the past, not paying attention to the future, only paying attention to monetary information, neglecting non-monetary information, only reflecting the shortcomings of the results of corporate economic activities that do not reflect the impact of corporate economic activities on society, and is increasingly affecting financial reports. Relevance. One of the foundations of financial reporting is the usefulness of decision-making, which provides useful information for interest groups that are of interest to the business. If financial reports are unable to provide useful information to users of such information, then the reasonableness of the existence of financial statements is inevitably questioned.
According to the current economic environment and its future development trend, the author believes that the current financial report content mainly has the following eight aspects.
1. Emphasis should be placed on the disclosure of income and risk information generated by derivative financial instruments. With financial innovation, types of derivative financial instruments such as futures and options that have no actual transactions but are only future economic interests or obligations are increasingly complex. Derivative financial instruments may cause dramatic changes in the company's future financial position and profitability. Failure to disclose the risks of such derivative financial instruments is highly likely to result in financial reporting users making mistakes in investment and credit decisions. Although China's current capital market is still immature, derivative financial instruments are still rare, and the impact on enterprises is still small, but we should also start research in this area to cope with the development and improvement of China's capital market.
Second, should pay attention to the disclosure of human resources information With the gradual advent of the knowledge economy era, the limitations of the current financial reports that focus on information disclosure on physical assets such as inventory, machinery and equipment have been increasingly shown, mainly in the physical The correlation between the magnitude of the value of the asset and the ability of the firm to create future cash flows is diminished, and even the correlation with the current market value of the firm is reduced. Under the current accounting system, the investment in manpower, regardless of the amount, is always the current cost, which makes the human assets greatly underestimated, and the cost is greatly increased. This is also one of the main reasons why the current financial report is being criticized more and more. Resolving the disclosure of human resources information, in addition to the need to study the theory and methods of human resource measurement, further involves the confirmation of human capital, and the resulting distribution of benefits, etc., is very difficult, should be used as accounting An important topic of the discipline is to study.
3. Information on dilution of shareholders' equity should be disclosed. As the shareholding company becomes the mainstream of corporate organization and the development of the securities market, especially the increase in the number of equity exchange securities caused by financial innovation and its popularization, the economic interests of shareholders The source is not limited to the company's profits, but more from the market price difference of the shares. This makes shareholders very concerned about the market value of the shares. Since the book value of the company's stock often differs greatly from the market value of the stock, and most of the stock market price is higher than the stock book value, this provides the company operator with an opportunity to increase profits through the exchange of equity. For example, if a company issues convertible bonds, the bond interest can be reduced by lowering the conversion price. The interest expense reduced due to the lower interest rate is converted into corporate profits, which increases the profit of the enterprise, and the difference between the conversion price and the stock market price is It will lead to dilution of the original shareholders' equity and cause losses to the original shareholders. Therefore, it can be said that the company's profit increase is based on the dilution of the original shareholders' equity. Whether this increase in profits is beneficial to the original shareholders of the company or not is not reflected in the current financial accounting. It reflects only the increase in profits due to the reduction in interest expenses, while excluding the dilution of the original shareholders' equity. Disclosure of such information will inevitably mislead investors to affirm the company's issuance of convertible bonds, and thus easily make decisions that are detrimental to its own economic interests. Therefore, financial reporting also needs to be improved in this regard to provide dilution information on shareholders' equity.
4. Pay attention to the disclosure of comprehensive income information of the enterprise. The income in the current financial report is based on the assumption that the currency value is constant. This is not the case when the economic activity is relatively simple and the value of the currency changes is small. Large, financial reporting users can make more accurate decisions with this benefit. However, with the complication of economic activities and the frequent changes in market value, the difference between this traditional accounting income and the real comprehensive income of enterprises is expanding. In this way, if the decision is made based on traditional accounting income, it is possible to make a wrong decision.
In addition to the gains and losses realized and recognized in the current income statement, the comprehensive income includes unrealized gains or losses, such as unrealized property revaluation surplus, unrealized commercial investment gains/losses, and foreign currency translation differences on net investments. .
In China, the disclosure of comprehensive income by enterprises has important practical significance, because: First, China’s market value changes greatly. Some enterprises, especially old ones, have a disparity between the actual value of assets held and the value of accounting book assets. The difference must be an expected profit and loss, revealing it can more fully and truly reflect the company's income status, and is conducive to investors and creditors' decision-making. Second, it can effectively curb corporate manipulation of profits or whitewash performance. Converting unconfirmed gains or losses into profit or loss through methods such as asset swaps is the most common method of manipulating profits. If a comprehensive income report is adopted, the possibility of manipulating profits in this way is fundamentally eliminated. Make accounting information more realistic. Because of this, China should step up research in this area and formulate rules for comprehensive disclosure of information at an early stage.
5. Emphasis should be placed on the disclosure of the company's future value trend forecast information. According to the general concept, the relevance of financial reporting is of great significance. The design of the traditional financial report itself also attempts to do this. In the absence of significant changes in the economic environment, people can simply use the financial reports that reflect the past business results and the causal links of behaviors to infer the future of the enterprise. However, under the conditions of drastic changes in the economic environment, it is impossible for people to directly use Past financial reports to infer the future of the business. This leads to a reduction in the relevance of financial reporting. The idea to solve this problem is to provide users of financial reports with predictive information on the future value trends of the company.
There are different perceptions and practices on how to disclose forecast information. In theory, the best form of disclosure is a complete forecast of financial reports, but in reality it is difficult and feasible to produce accurate and complete forecast financial reports. In practice, many countries in the world only require listed companies to provide forecast data on earnings per share. The author believes that the preparation of a complete forecast financial report is not only technically difficult, but more importantly, it has no use value. Because different people look at a company from the perspective of their own interests, they will inevitably derive different values ​​because of their different attitudes toward income and risk. In this case, it is not necessary for companies to prepare comprehensive forecast financial reports. Disclosure of future value trends of the company should be as detailed as possible to disclose some information related to predicting the future value of the company, such as corporate investment, product market share, material cost increase, new product development, etc. And the information of the external environment, providing useful information services for financial reporting users to predict the future value trends of enterprises.
6. A value-added form should be prepared to reflect the contribution of enterprises to society and the distribution of their contributions. The main body of the current corporate financial report is investors and creditors. The disclosures are mainly related to the investment and credit decisions of investors and creditors. The profitability and financial status of these statements do not reflect the true contribution of the company to the society, that is, the value-added or added value provided by the enterprise, and it does not reflect the distribution of the contribution. Today, as the political economy becomes more and more democratized, the shortcomings of traditional financial reports in this respect are increasingly prominent. First, the dominance of monetary capital is gradually weakening, and the contribution ratio of human and intellectual capital is increasing. This requires financial reports to serve these information users. Second, the trend of democratization of political economy requires the dominators of monetary capital. Announce the contribution of enterprises to the society and the distribution of contributions to facilitate the supervision of the society; third, announce the true contribution of enterprises to the society and its distribution, which is conducive to the coordination of labor and management, various capital suppliers, and enterprises. The relationship with the society and the national government plays a positive role in resolving the contradictions in the distribution of interests and increasing the synergy in the creation of interests. Fourth, the state understands the true contribution of enterprises to society and is conducive to the scientific formulation of the country. Control measures to promote economic development. Because of this, the UK added a value-added form to the Company Report published in 1975 and used it as the fourth accounting statement after the balance sheet, profit and loss statement, and cash flow statement. After the United Kingdom, many countries such as the Netherlands, West Germany, Denmark, France, Italy, Norway, Switzerland, Sweden, Australia, New Zealand, Singapore, etc. also began to prepare the table, and some also announced the form to the public.
Since the "value-added form" has so many functions and there are so many countries compiling the form, what reason does China have not regard it as one of the main reports of the financial report of Chinese enterprises? The author believes that in China, we should pay close attention to the theory of "value-added form" and its compilation methods, and introduce relevant guidelines to incorporate the "value-added form" into China's financial reporting system as soon as possible.
7. Information disclosure that should pay attention to the environmental impact of enterprises The enterprise is both the creator of social wealth and the main polluter of the environment. It has a close relationship with the environment. The impact of the environment on the survival and development of enterprises can be examined from the following two aspects: first, the impact of the environment itself on the survival and development of enterprises; second, the impact of social causes caused by the environment on the survival and development of enterprises. Understanding the impact of the environment on the survival and development of the business is important to investors, creditors, managers and other interest groups related to the business. First of all, survival is related to the question of whether a company can continue to operate. If a company cannot continue to operate, then accounting information based on continuing operations is meaningless. Second, understand the contingent liabilities arising from environmental factors. The information on the cost of pollution control, the depreciation of asset value and other environmental risks, which affect the development of enterprises, will help investors, creditors and managers make correct decisions. The current financial accounting ignores the disclosure of this information, and has not adapted to the requirements of increasingly strict environmental protection and environmental protection. Therefore, disclosure of information about the environmental impact of a business should be part of an improved financial report.
China is currently one of the most polluted countries in the world. Under such circumstances, the establishment of information disclosure methods and systems for enterprises to influence the environment has an important role in controlling pollution and improving the environment in China.
8. It should reveal the situation of enterprises consuming natural resources. With the advancement of science and technology, human beings have deepened their understanding of the natural world, and have a fuller understanding of the limited nature of natural resources. Accordingly, the understanding of wealth has also been improved. The scope extends from artificial wealth to the sum of artificial wealth and natural wealth. Enterprises are the producers of artificial wealth and the biggest consumers of natural wealth. Whether a company contributes to the growth of social wealth depends on whether the artificial wealth it creates can make up for the natural wealth consumed. Obviously, the current financial report that only calculates the investor's investment in capital gains and losses does not provide this information. Therefore, it is necessary to improve it.