New issue of Financial Accounting - Professional J

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New issues of Financial Accounting: Professional Judgement

A, Accounting the concept and characteristics of professional judgments accounting professional to determine the accounting personnel in accordance with accounting standards, system requirements, according to corporate finance environment and production and management features, the use of their expertise and professional experience in matters dealing with the daily accounting and preparation of financial statements should be the principles, methods, procedures and other aspects of judging and selection process. It has the following main features: 1. Targeted. Judge always has its specific targeting. In general, the accounting staff in addition to hope that the results of judging and selection of timely, properly reflects the company's current financial position, operating results and cash flows, but also want to condition the recognition, measurement, revealing the choice of methods and use of effective maintenance and growth of their own economic benefits. 2. Subjectivity. Accounting staff accounting standards allow companies to use different methods of accounting data processing, and different methods may yield different results, but what a way to make the results more close to the objective reality, and sometimes difficult to have an objective standard, only can be based on professional judgments of accounting personnel to determine. This is undoubtedly to some extent mixed with the subjective nature of accounting personnel. 3. Tradeoff of. The use of professional accounting personnel to determine the selection of accounting policies and accounting estimates process, and always faced with a number of options for comparison, optimization, reliability and relevance of face, stability and suitability, interest-driven and fair justice and other concepts and positions Contradictions and weigh options. Professional Judgement is a process of comparison can be said, weigh, the process of choice. 4. Subject to the control of. The accounting profession to determine restrictions and requirements in a relatively subjective judgments under which conditioned by many factors: ① subject to external constraints of social mechanisms, such as regulations, policies, objectives, conditions and technical levels; ② restricted Some of its characteristics in accounting principle and the corresponding theoretical framework; ③ own business by the accounting staff skills and professional ethics standards of the constraints. Second, the accounting profession to determine the specific accounting standards and . substance over form principle. This principle requires accounting staff during the accounting process, should and must be professional analysis and judgments, when the economic substance of transactions and events to its external manifestations are not consistent, the emphasis on economic substance in order to ensure the reliability of accounting information. 2. The importance of principles. This principle requires each enterprise to determine their own important issues, while important and unimportant is a relative concept. In practice, the importance of standards to judge is not fixed, but with different accounting subject matter have different accounting differences. Therefore, an economic business is important, whether the impact of information users decision making, whether it should be separately disclosed, as the case may be, should be, in large part depends on the accounting staff of professional judgments. 3. Drawn between revenue expenditure and capital expenditure principle. The accounting staff, to determine a whether the economic benefits generated by spending more than one year or one operating cycle is to follow the premise of this principle, more than one year (or one operating cycle) should be used as capital expenditures, or to a revenue expenditure accounted for. (B) Accounting Professional Judgement in the accounting policy choices reflected in the accounting policies, accounting refers to when companies follow specific principles and the specific accounting treatment adopted. Accounting Professional Judgement in accounting policy and accounting treatment of choice is mainly manifested in the following areas: 1. Inventory valuation method. Is the use of FIFO, or LIFO, or by other methods allowed; is the use of historical cost, or use the lower of cost and net realizable value method. 2. Long-term investment in the accounting method. Long-term equity investments using the cost method, or using the equity method; long-term debt investment premium discount amortization method is the use of straight-line method, or using the effective interest method. 3. Fixed assets depreciation method. Is the straight line method, the workload of law or by the number of years the total method, double declining balance method and other accelerated depreciation methods. 4. Income tax accounting method. Is the use of tax effect accounting method, or the use of tax payable method; the tax effect accounting method, the deferred method is used, or used debt method. 5. Foreign currency translation policy. Current rate method is used, or when state law or by other methods. 6. Financial statements merger policy. The fiscal year of the parent company and subsidiaries inconsistent principles and to determine the scope of consolidation principles. 7. Revenue recognition principles and methods. Specific accounting standards provides the four basic conditions for revenue recognition, accounting personnel will focus more on substance rather than form of the transaction to determine whether sales of goods can be confirmed; and long-term project contract method of revenue recognition is based on the completed contract method, or by completion percentage method or other methods recognized accounting staff need to be judged. 8. Bad debts accounting method. Direct write-off method is used, or used the allowance method. 9. Borrowing cost accounting methods. Borrowing costs are capitalized or included in the income statement. 10. Or a matter of processing. Or a matter for the obligations arising from the reality obligations or potential obligations; obligation is to confirm if it is real or not recognized; due to or arising from the assets of the matters disclosed or not disclosed. 11. Related party relationships and transactions disclosed. How to judge according to the form and substance of related party relationships and transactions between related parties, how the importance of the principles according to the notes in the report to be disclosed. 12. Non-monetary transactions in the accounting. Specific accounting standards prescribed under the non-monetary transactions and the limits of monetary transactions, accounting personnel must first determine whether a transaction is monetary transactions or non-monetary transactions, and then to the appropriate accounting treatment. (C) Accounting Professional Judgement in accounting estimates reflected in the accounting estimates, refer to the uncertain business transactions or events, recently based on information available to the judgments made. Accounting Professional Judgement in the use of accounting estimates mainly as: 1. Provision for bad debts. 2. Fixed asset useful lives and net salvage value determination. This provision requires companies to determine the depreciation policies, not only to consider the physical wear and tear of fixed assets and intangible losses to consider, therefore, useful lives of fixed assets and net residual value depends on the accounting staff to determine professional judgments. Similarly, intangible assets, amortization period of long-term prepaid expenses also depends entirely on the accounting staff of professional judgments. 3. Impairment of assets. Enterprises should be based on the requirements of the principle of prudence, reasonably be expected potential losses that may occur in the provision for asset impairment loss of assets. And fixed assets, intangible assets, entrusted loans 4. Liabilities estimate. The best estimate of the amount can only be possible by the accounting officer under the amount of probability calculation. Third, our analysis of the accounting profession to determine the status of both theorists or practitioners, they were not given due attention to professional judgments,[link widoczny dla zalogowanych], on the professional judgments of even smaller. Current accounting profession to determine the overall level of concern, accounting personnel, the accounting for the use of professional judgments there is a certain blindness, this blindness is mainly manifested in: (1) herd mentality. Some accountants do not take into account the actual situation of their enterprises, other enterprises will approach similar to the business copied. (2) neglect of business and technical conditions for the economic environment in which non-accounting factors. Many professional judge confined within the scope of the accounting profession, closely linked with it ignored environmental and technical factors. (3) over-dependent on the attitude of business leaders. Some unprincipled accounting personnel attached to business leaders, blindly accept the attitudes and perceptions from the leadership to abandon its due professional judgments.