国际会计准则第37号的重要性Essay

国际会计准则第37号的重要性Report
 

引言

自国际会计准则第37号发布后，遵守国际标准的公司可以很好地解决如何识别和计量负债和资产相关的问题。它提供了一个明确的方向，让公司可以披露与负债相关的交易。然而，“可能”或“也许”这样的话在这一标准中涉及很多次，这可以让期权和创造性会计的公司公司承认它作为一项规定，在资产负债表上 有负债根据票据。这将进一步误导投资者的决策。因此，在这篇文章中，我们将重新评估它，进行深入彻底的评析。
 

本报告将首先提供一些关于国际会计准则第37号发布的背景，国际会计准则的主要标准，以及这些标准的重要性。此外，报告将从几个方面评价国际会计准则第37号：1）通过的选项；2）国际标准的适用性；3）对创造性会计的机会；4）这一标准的弱点；5）这个标准可以改进的方面。

 

Importance Of IAS37 Requirements 
 

Introduction

Since IAS 37 is published, companies obeying by international standards can solve the difficulty of how to recognize and measure provision, contingent liability and contingent asset. It provides an explicit direction for companies to disclose incurred transactions associated with liabilities. However, "probable" or "possible" such words are involved many times in this standard which can allow options and creative accounting for companies on whether to recognize it as a provision on the balance sheet or a contingent liability under the notes. This will further mislead investors' decisions. Thus in this essay, we will re-evaluate it and give an in-depth understanding of it.

 

This report will first give some background of IAS37, and what the major requirements of this standard are and why those requirements are important. Furthermore, the report will critically evaluate the IAS37 from aspects of 1) options allowed; 2) applicability of this standard internationally; 3) opportunities for creative accounting; 4) the weaknesses of this standard; 5) how this standard can be improved.

 

2. 国际会计准则第37号的背景Background of IAS 37

The International Accounting Standards Committee (IASC) issued IAS37 Provisions, Contingent Liabilities and Contingent Assets in September 1998. It replaced parts of IAS10 Contingencies (IAS37 BV2008) and became operative for annual financial statements covering periods beginning on or after 1 July 1999 (IAS37, BV2008).

 

Before the announcement of IAS37, different countries use various ways to verify their provisions, which bring the problem of inconsistency. Some enterprises confirm their provisions, depending on whether to undertake current obligation or not. While some other enterprises are according to managers' willingness of proceeding future payments to confirm their preparations. Therefore, the results are:

 

Different types of business enterprises have different classification of provisions, so it creates inconsistency. This jeopardizes comparability of different enterprise's financial statements.

 

It provides the opportunity for certain enterprises to manipulate their profits. For example, the cost should be recognized in the period but may be moved to other period to confirm; the cost should be confirmed in future but may be moved to the current period. Therefore, to achieve the balance of profits in each period is one of purposes of this regulation.

 

Some enterprises include some liabilities that do not meet the conditions of the requirements into their balance sheet. This apparently damages the current financial situation of the company.

 

'The objective of this standard is to ensure that appropriate recognition criteria and measurement bases are applied to provisions, contingent liabilities and contingent assets and that sufficient information is disclosed in the notes to enable users to understand their nature, timing and amount '(International Financial Reporting Standards (IFRS), 2009). The key principle of IAS37 is that a provision should be recognized only when a liability exists. Planned future expenditures are not recognized as provisions or contingencies, even if the board of directors has authorized them.

 

3.国际会计准则第37号的主要要求 IAS 37 Major requirements

An entity should recognize a provision as a liability based on the following three criteria met simultaneously:

 

(a) there is a present obligation or more likely than not that a present obligation exists at the end of the balance sheet date as a result of an obligating event;

 

(b) it is probable (i.e. more likely than not; i.e. 50%--95%) that an outflow of the economic benefit of the entity will exist;

 

(c) the amount of the outflow can be estimated reliably (IAS37 BV2008).

 

If the first criterion is met but it is possible (i.e.5%-50%) NOT probable that an outflow of economic benefit of the entity exists and the amount of the outflow cannot be measured reliably OR if possible obligation exists and the outflow of the economic benefit of the entity is not remote (i.e. 0%-5%), then contingent liability will arise.

 

In respect of contingent liability an entity should disclose it instead of recognizing unless the possibility of the outflow of the economic benefit of the entity is remote (IAS37 BV2008).

 

As regards a contingent asset, it should be just disclosed as well as contingent liability, unless the amount of the inflow of the contingent asset is virtually certain (i.e.95%-100%). When the inflow of the contingent asset is virtually certain, then it is appropriate to be recognized as an asset on the balance sheet (IAS37 BV2008).

 

When recognizing a provision, the amount of the outflow of the economic benefit of the entity should be based on the best estimate, i.e. this amount should be the same as the entity needs to pay to settle the obligation in due course (IAS37 BV2008).

 

When measuring a provision, things such as, risks and uncertainties, discounted provisions (if time value of money is material), changes in the law or other cases which can affect provisions, should be taken into account but do not take into account gains from the expected disposal of assets (IAS37 BV2008).

 

When reimbursement happens, an entity recognizes it if it is virtually certain and the amount recognized should not be more than the amount of the provision. The reimbursement should be recognized as a separate asset in the balance sheet. If the reimbursement and the expense relating to a provision are sustained in the same reporting period, then the expenses disclosed in the comprehensive P & L can be netted off by the amount recognized as a reimbursement (IAS37 BV2008).

 

The provision should be reviewed annually and adjusted according to latest best estimates. Changes in the provision can only be used for its original intention (IAS37 BV2008).

 

Provisions-three specific applications mentioned by this standard, namely: future operating losses, onerous contracts, restructurings. With regard to future operating losses no recognition should be made as a provision. In terms of onerous contracts, the unavoidable cost in excess of the benefit which can be received by the entity should be recognized as a provision. In related to restructurings, restructuring costs should be recognized when the criteria for provisions are met (IAS37 BV2008).

 

4.国际会计准则第37号的重要性 The importance of IAS37 requirements

According to Deloitte, IAS37 aims to ensure that recognition of provisions, contingent liabilities and contingent assets are made by using the best methods and measurements, to ensure that users of financial statements receive adequate and appropriate information for investment decision-making processes. In addition, IAS37 aims to ensure that it only deals with the real obligation in the financial statements and future expenditure, even if excluded from recognition by the responsible board.

 

The importance of taking the criteria into account, when the entity recognises the provision, is to prevent any unnecessary provision from being recognised in order to enhance the entity's value in subsequent periods in unsubstantiated ways, leading to provision of unreliable information to financial statement users (ACCA, 2009). The importance of the liability and asset disclosure requirements could be viewed as returning to the Conservatism Principle in accounting which advises on ignoring profits not yet achieved, taking all expected losses into account and not registering potential gains until they occur. In other words this requirement prevents an entity from providing unrealised profits and subsequent information that might mislead users.

 

IAS37 provides guidelines regarding best estimates of provisions associated with its objectives, aiming to provide an appropriate way of measurement in order to represent sufficient and appropriate information. The standard requires the entity to take into account estimating process risks, uncertainties and other elements in order to achieve the best estimate for the provision. Following this requirement can prevent unrealistic values being reported in the entity's financial statement. The requirements for solving the problem of reimbursement and illustrating the three specific applications are equally comprehensive, so that accountants know how to resolve them. Otherwise, it is likely that each entity might adopt its own method of troubleshooting which differs from others when facing such cases in reality, resulting in a lack of comparability among entities. In these instances investors may be misled when making investment decisions. In summary the importance of IAS37 is that it is intended to reduce the possibility of deliberate misstatement of an entity's provisions, contingent assets and liabilities.