(3) Disclosure of contingencies. Contingency refers to an uncertain event formed by past transactions or events, and its result can only be determined by the occurrence or non-occurrence of some future events. Common contingencies mainly include: pending litigation or arbitration, debt guarantee, product quality guarantee (including product safety guarantee), commitment, loss contract, restructuring obligation, environmental pollution remediation, etc. East Asian countries rarely disclose the guarantee situation, and people familiar with the operating environment in East Asia know that almost all large companies and banks often provide financing guarantees for their affiliated or unrelated enterprises. Take the bank-guaranteed loan as an example. In East Asian countries, the common practices of enterprises are as follows: first, enterprises with strong financial strength provide loan guarantees for enterprises with weak strength to help them obtain loans; On the other hand, many enterprise groups provide mutual guarantee for obtaining loans. If these cross-guaranteed loans are not disclosed, on the one hand, it will leave hidden dangers for the formation of bad debts of banks, on the other hand, many inefficient and unprofitable projects will get funds without the knowledge of shareholders, which will seriously damage the interests of investors. Once the market fluctuates slightly, there will be a chain reaction of corporate repayment crisis, which will lead to the redemption crisis of banks.
The defects in the above information disclosure cover up the real financial situation of the company, leading to serious information asymmetry and misleading investors. When the market fluctuates and investors don't expect it, investors will panic and withdraw their funds, which will lead to financial market chaos and eventually lead to financial crisis.
(B) weak internal control is difficult to cope with financial risks
The purpose of internal control includes protecting the safety and integrity of assets, improving the quality of accounting information, improving the efficiency of operation and management, preventing and controlling financial risks, and realizing the management objectives of the unit. Good internal control can play a role in preventing risks. Weak internal control will reduce the ability of enterprises to resist risks, and ultimately it is difficult to bear the impact of financial risks.
1, it is difficult for financial enterprises to resist financial risks due to lax internal control.
The operating principles of commercial banks require asset-liability management, control the use of funds by sources of funds, prevent overload operation, keep the maturity, quantity and structure of assets and liabilities corresponding, and improve asset liquidity. Reduce the proportion of non-performing assets, avoid operational risks and improve operational efficiency. In the financial crisis, most of the banks that have been rectified, merged and reorganized have overheated their economies, failed to strictly implement the operating principles of risk control, blindly pursued high profits, and even bank funds flowed into the securities market, which has hidden huge risks. Once the market environment changes dramatically, it is difficult to deal with it. On the other hand, commercial banks have poor internal management and do not operate according to the principle of asset-liability management. The loan approval system, loan separation system, post-loan tracking system, loan recovery responsibility system, accounting system, internal audit system, internal control system and other systems have not been strictly implemented.
One of the reasons for the Asian financial crisis is the defect of internal control of enterprises. One of the manifestations is the existence of off-balance-sheet management and accounting management fraud. In order to escape control and make huge profits, many financial institutions have relaxed accounting management and engaged in off-balance-sheet operations. For example, the direct cause of the collapse of Yamaichi Securities Company in Japan is the off-balance sheet debt as high as $2 1 billion. Some financial institutions practise fraud and fabricate accounting information, such as new york Branch of Daiwa Bank, which conceals serious losses and falsely reports profits. The second performance is the lack of effective internal control system in internal financial accounting management. There are serious defects in the internal control system of financial institutions in many Asian countries. For example, Toshihide Iguchi was solely responsible for the trading of Daiwa Bank in the US bond market, and only he knew the trading process and records, which eventually led to huge losses. Another important principle of internal control system is regular inspection and supervision. In many Asian countries, the internal audit of financial institutions often goes through the motions and fails to play its due role, which leads to the deterioration of banks' operating conditions and greatly increases their operating risks.
In the subprime mortgage crisis, careful examination of borrowers is the first step for banks to issue loans, and it is also an important basis for banks to filter risks. Originally, banks have very strict standards for obtaining residential mortgage loans, and lenders generally need to meet the 5C standards (that is, morality, ability, capital, collateral, business environment and contacts) to obtain loans. At the same time, the borrower needs to strictly implement the agreement and accept the supervision of the lending institution after receiving the money. However, with the rise of housing prices and the development of asset securitization, in order to expand their own interests, lending institutions began to relax or even cancel relevant standards and evade internal control, which eventually led to the financial crisis.
2. The internal control of non-financial enterprises is weak and it is difficult to cope with risks.
When the financial crisis strikes, the biggest difficulty encountered by non-financial enterprises is the lack of liquidity, which makes it impossible to maintain normal production and business activities, and eventually leads to suspension of production and bankruptcy. In the context of the financial crisis, the currency depreciated sharply, and the value of real estate and other collateral fell, resulting in many heavily indebted enterprises unable to pay their debts when the economy was overheated. Banks and other financial institutions generate a large number of bad debts, which leads to a wave of bank runs. As a result, everyone lost confidence in the market, financial institutions contracted credit and dared not lend easily, which led to the cut-off of corporate funds and liquidity crisis. Many big-name enterprises that have been operating for many years have also reorganized, merged or even closed down. Small and medium-sized enterprises lack production funds, and some can only close down. These enterprises that have stopped production and closed down one after another are largely due to their overly optimistic attitude and excessive debts during the economic boom. Debt can reduce the capital cost of enterprises and bring benefits to shareholders, but when the debt rises to a certain proportion, the bankruptcy risk brought by debt will exceed the benefits.
In the financial crisis, the internal control of Asian countries was ineffective, which led to a high degree of operating leverage and financial leverage. When these countries suffer from external shocks and their overseas sales decline, which cannot be balanced by their domestic demand, the decline in corporate profits will become very significant and even lead to huge losses. The financial problems of companies and financial institutions exposed during the crisis were far more serious than expected, and the devaluation of the currency further aggravated their financial difficulties. When the financial storm struck, it could not stand the impact and aggravated the financial crisis.
(C) the weakening of audit supervision has increased the risk of financial crisis
The main function of audit is supervision and notarization, that is, auditors can judge whether the economic activities of the audited entity meet the established standards by auditing and checking the accounting information of the audited entity. Expose economic behaviors that violate standards and propose corrective measures; According to the audit results of the accounting information of the audited entity, an audit report is issued, and opinions are expressed on the authenticity and fairness of the accounting information of the audited entity. An important professional ethics of auditors is independence, objectivity and notarization. Whether the auditors find the above-mentioned accounting information disclosure and internal control defects, whether they put them forward in the audit report and expose them to the relevant departments has a certain relationship with the occurrence of the financial crisis. If these problems can be found in time and suggestions can be made, the possibility of financial crisis will be reduced. Unfortunately, countries in the financial crisis generally do not attach importance to audit supervision. Although the audit itself inevitably has risks due to government intervention, and the complexity of accounting technology and content also has limitations, when the world-famous large-scale and universal financial crisis appears, it cannot be said that the supervision of the regulatory authorities is weak, and of course it also includes the responsibilities that the audit institutions cannot escape.
(D) violation of prudent accounting principles weakened the ability to resist the financial crisis.
Prudence principle is a universally recognized accounting principle, which requires all enterprises or units to conduct accounting. It is necessary to reasonably predict the expenses or losses that may occur in the future and calculate the current profits and losses. In other words, large losses or expenses that may be concentrated should be prepared before they occur, reasonably proportioned and appropriately dispersed. Make the financial situation and operating results reflected by accounting data based on a sound and reliable basis.
South Korea's financial crisis is a foreign debt repayment crisis. Due to the large-scale investment of enterprises, the foreign debt is too high. High debt ratio and unfavorable external environment make many enterprises bankrupt or on the verge of bankruptcy, and the bad debts of banks have increased sharply, making it impossible to repay foreign debts. In addition, South Korea has not been cautious about opening up its capital market. South Korea's capital market is too early to open to the outside world when conditions are not very mature. As a result, the foreign exchange market and the stock market fluctuated greatly and the economy was in trouble. Another example is Thailand, where banks require financial companies to make provision for bad debts at an average rate of 1. 13%, which is obviously far from the average rate of 1.996 during the economic downturn. From the accounting point of view, it shows that enterprises in these countries, including financial enterprises, have not fully and reasonably predicted the possible future expenses or losses and possible risks. Bad debt reserve is not raised, but bad debt reserve is not fully raised. When the crisis happened, there was not enough funds to make up for it, which violated the principle of prudence.
In this subprime mortgage crisis, the greed of financial institutions prompted them to lend excessively, but they did not consider their own potential risks and did not fully make provision for bad debts. In some legal proceedings, some financial liabilities were accused of improper estimation. For example, the mortgage assets with recourse are packaged and sold in securitization, which is similar to treating accounts receivable as loans obtained by pledge, adding a liability and not writing off the book value of the creditor's rights. The bad debt risk of creditor's rights is still borne by the enterprise that sells the mortgaged assets, and the bad debt reserve of the pledged assets is reasonably accrued. Mortgage institutions should not only confirm a liability on the balance sheet, but also make provision for bad debts in a reasonable way. FASBNo. 140 "Transfer of Financial Assets, Service Rights and Dissolution of Financial Liabilities" stipulates that liabilities related to financial assets with recourse shall be measured at fair value. FASB Statement No.45 requires that the nature of collateral, the maximum amount that may be paid in the future, the book value of liabilities, the nature of available collateral and the recoverable amount should also be disclosed. However, in some legal proceedings, it is often accused that the amount of debt is an inappropriate estimate, which violates the requirements.
Fourthly, the role of accounting in preventing financial crisis.
(A) provide accounting information to prevent financial crisis
Accounting information is an international business language. All financial transactions and capital flows must be measured, classified and reported by accounting, and must be recorded and reflected in accounting vouchers, account books and statements. It not only serves the internal management of enterprises, but also serves investors and the departments of finance, taxation, finance and auditing related to enterprise work. Therefore, accounting is the information source and database of financial activities. Whether the financial information provided by accounting is timely, accurate and complete is directly related to the timeliness and correctness of financial decision-making. The lag, distortion and incompleteness of accounting information is one of the important reasons leading to the financial crisis. If the accounting is true, comprehensive and timely, the decision-makers of financial enterprises should pay attention to the collection and analysis of accounting information when the financial risks begin to be cleared, so as to find out and take measures to prevent or resolve them in time. Therefore, providing timely, true and comprehensive accounting information for decision-making departments plays an important role in preventing and resolving financial risks.
(2) Improve self-immunity through internal control.
Improving the immunity of enterprises to financial crisis through internal control is fundamental to prevent financial crisis. The core of internal control is to effectively guard against various risks. In order to control all kinds of risks within the permitted scope, the establishment of internal control must take prudent operation as the starting point and fully consider the risks and problems that may occur in all aspects of business processes. Establish appropriate operating procedures and control steps to avoid and reduce risks, and set what measures should be taken to remedy when risks occur. For example, establish and improve a strict accounting counter supervision system, supervise the outflow of funds, and put an end to mistakes and accidents in daily business processing. Another example is to strengthen financial supervision, strictly examine the accounting statements of borrowing enterprises, prevent enterprises with insufficient capital, heavy debts and inability to repay loans from defrauding loans through various improper or even illegal means, and combine the financial supervision of accounting departments with the loan "three checks" system of credit departments. With the help of accounting means, by examining and analyzing the bank accounts, accounting books and statements of borrowing enterprises, we can also effectively urge those rich defaulting enterprises to repay in time, thus resolving the non-performing assets of enterprises. All the above measures can improve the ability of enterprises to resist risks, thus playing a role in preventing financial crisis.
Five, accounting countermeasures to prevent financial crisis
With the further strengthening and development of international economic integration, countries are getting closer and closer in economic and financial aspects, which brings many development opportunities to the global economy and greatly increases financial instability. Behind the apparent prosperity is a greater risk that may lead to financial crisis than before. Therefore, all countries, especially developing countries, must strengthen their awareness of preventing financial risks and prevent the outbreak of the global financial crisis. Accounting has a certain preventive effect on financial crisis, so accounting reform must be strengthened.
(A) improve the accounting information disclosure system
Improve the accounting information disclosure system, improve the existing accounting information disclosure system as soon as possible, formulate new normative laws and regulations urgently needed by the capital market, and make more detailed provisions on the content, time, method and punishment of accounting information that listed companies must disclose, so as to enhance its operability. In particular, it is necessary to strengthen the information disclosure of financial institutions and take improving the transparency of financial information as an important part of improving the external risk management mechanism. It is necessary to further clarify the roles and operational norms of various institutions, refer to the requirements of the International Monetary Fund for the transparency of the financial system, implement necessary mandatory information disclosure measures for financial institutions, especially financial innovation, strengthen information disclosure management, and improve the transparency of financial operations, financial risks and financial innovation products.
(2) Strengthen the internal control of enterprises and effectively prevent all kinds of business risks.
Further strengthen internal control in high-risk areas, for example, the control of letter of credit management. In addition, with various authorization systems, strict internal control procedures are formulated to minimize various operational risks. The objectives of establishing and perfecting the internal control and supervision system are: to ensure the safety and integrity of the company's property; Control the correctness and reliability of relevant data; Ensure the truthfulness and completeness of accounting information; Improve operational efficiency, prevent fraud and control risks. At the same time, when establishing the company's internal control system, we should be forward-looking, look at the overall situation of time and space, create a favorable control environment, an effective accounting system and various practical and effective control procedures within the company, supplemented by certain control means such as organizational structure control, authorization approval control, budget control, physical control, internal audit control and so on. And integrate these control methods into various specific management systems established. For example: asset management system of fixed assets, procurement and scrapping management system, material storage and use management system, product storage and storage management system, cash payment and accounting system, expense reimbursement approval system, etc. Because these control systems are closely related to the authenticity and integrity of accounting data. Establishing a scientific and effective internal control system can not only effectively ensure the authenticity and integrity of accounting information disclosure, but also improve the efficiency and effectiveness of enterprise operation, thus coping with financial risks.
(3) Strengthening the supervision of the external supervision system.
To ensure the disclosure quality of accounting information of listed companies, we should not only do a good job of internal rectification and standardization, but also strengthen and improve the external governance structure of the company to ensure the supervision quality of listed companies by intermediaries. First of all, intermediaries themselves should be responsible to investors and constantly improve their professional ethics and professional level; Secondly, as the behavior supervisor of intermediary institutions, the restraint departments (such as financial departments, securities regulatory departments, industry associations, etc.). Efforts should be made to create conditions to really play its due role in restraining the behavior of intermediaries; Thirdly, if an intermediary agency violates professional ethics or neglects its duties in performing its own functions, it must not be tolerated as a management restraint department. It should increase the punishment, strengthen the legal responsibility restraint of the external intermediary supervision agency through the audit supervision of the external supervision agency, and ensure the quality of accounting information disclosure of listed companies.
(D) improve the accounting laws and regulations system
First, improve the legal system and strengthen law enforcement. The legislative department should further improve the system of laws and regulations, formulate detailed rules for the implementation of accounting regulations, clarify the judgment standards and punishment methods for illegal acts of accounting information disclosure, avoid confusion in law enforcement, make relevant laws and regulations more practical and operable, and plug legal loopholes in irregular accounting information disclosure; Secondly, the relevant administrative departments should strengthen law enforcement, especially strictly investigate the responsibility of the leaders of illegal companies, and force those who have inflated their selfish desires to reflect on and restrain their profit-seeking behavior, so that accounting information can be restored to its true colors under the protection of the legal system. Third, improve the securities laws and regulations system. To standardize the disclosure of accounting information in the securities market, there must be a perfect legal system as the fundamental guarantee.
(5) Improve the professional level and professional ethics of accountants.
In general, accountants are the direct operators of false accounting information. Objectively speaking, if accountants have high professional quality and professional ethics, they can effectively prevent and resist the publication of false accounting information to a certain extent and within a certain range. Strengthen accounting education, constantly improve the professional quality of accounting personnel, actively carry out training and regular inspection to update accounting knowledge, and do not allow unqualified accounting personnel to take up their posts. It is necessary to combine formal training with examinations and give them the standards for their posts. The quality of a country's economic operation is inseparable from high-quality accountants, and the governance of accounting information distortion depends on the improvement of accountants' professional ethics and professional quality. Therefore, only by constantly improving the professional quality and professional ethics of accountants can we meet the objective needs of the development of market economy.
Ending of intransitive verbs
The outbreak of financial crisis is caused by many factors, accounting is only one of them. This paper analyzes several financial crises in modern times from the perspective of accounting, and then puts forward accounting countermeasures to prevent financial crises. It aims to provide some help for predicting and preventing financial crisis. The financial crisis is constantly undergoing new changes, and the factors that triggered the financial crisis will also change. However, only by constantly studying and drawing lessons from the financial crisis can we better prevent the recurrence of the financial crisis.