m中山大學管捏學院 经m00 BUSINESS SUN YAT-SEN UNIVERSIT Lesson 11 Understanding Accounting Principles Mask eam of PJLDAWIENML ACOJNNI Business School, Sun Yat-sen University
Lesson 11 Understanding Accounting Principles Task Team of FUNDAMENTAL ACCOUNTING Business School, Sun Yat-sen University
Outlines Q Accounting standards: a tool for trusting Q Introduction of Accounting Standards Q Accounting standards in China CA Brief of Accounting Theory 3s Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity
2 Outlines ⧫Accounting standards: a tool for trusting ⧫Introduction of Accounting Standards ⧫Accounting Standards in China ⧫A Brief of Accounting Theory
Opening Story ◆ Enron scandal again! 0 filed 8-K to restate its financial statements in November 8. 2001 n Filed bankruptcy protection under Chapter 11 in December 3, 2001; D Mr berardino. then ceo of andersen. issued an announcement: Enron, a wakeup call; Accounting standards is the first to be blamed: Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 3
3 Opening Story ⧫Enron scandal again! Filed 8-K to restate its financial statements in November 8, 2001; Filed bankruptcy protection under Chapter 11 in December 3, 2001; Mr. Berardino, then CEO of Andersen, issued an announcement: Enron, a wakeup call; →Accounting standards is the first to be blamed;
Opening Story C The standards involved in Enron case n Special purpose entity(SPe); D FASB on SPe: 3% independent interest; Assume substantially the risk d Enron and Andersen: stick to 3 %o requirement, ignoring the risk assessment requirement; Q Accounting Standards or standards enforcement? Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity
4 Opening Story ⧫The standards involved in Enron case; Special purpose entity (SPE); FASB on SPE; →3% independent interest; →Assume substantially the risk; Enron and Andersen: stick to 3% requirement, ignoring the risk assessment requirement; ⧫Accounting Standards or standards enforcement?
Accounting and Trust Q How could accounting help to develop trust? n Translate all business activities into numeric so it could be summarized. measured and evaluated n Managers may report and discharge their accountability; Principal-agent problem Since all common investors are principals; D Free-rider issues are pervasive n How to assure managers to provide financial report truthfully and reliably? Task Team of FUndaMientalactoUntING Business Sehool. Sun Yatsen niversity 5
5 Accounting and Trust ⧫ How could accounting help to develop trust? Translate all business activities into numeric so it could be summarized, measured and evaluated; Managers may report and discharge their accountability; →Principal-agent problem; ⧫ Since all common investors are principals; Free-rider issues are pervasive; How to assure managers to provide financial report truthfully and reliably?