Accounting Supervision And Control Over Risks Of Derivative Financial Instruments

In recent years derivative financial instruments developed rapidly,but meanwhilemany incidents happened,and the current serious financial crisis is also the result offailure to control the risks of derivative financial instruments.Only the risks ofderivative financial instruments be identified accurately and promptly and disclosedsufficiently to the external stakeholders businesses can sustained and developed stably,and external stakeholders' interests can be protected.China needs to developderivative financial instruments,but the risks of derivative financial instruments mustbe fully understood and we can monitor and control it effectively.The accounting is the basis of risk management of derivative financialinstruments.Compared with the financial supervision,accounting supervision ofderivative financial instruments is more insufficient in China.At present,thetheoretical issues on the accounting supervision of derivatives are in discussion andthe accounting supervision system of derivative financial instruments is not in goodcondition.Then the author chooses the accounting supervision of risks of derivativefinancial instruments as the research field.From an accounting point of view thepaper explores how to identify the risks of derivative financial instruments timely andaccurately and disclose it to external stakeholders and how to reduce the adverseimpact through internal control and external supervision.At present new accounting standards of financial instruments have beenimplemented,derivative accounting has changed dramatically,and the financialturmoil is still deteriorating.Thus it is of a strong practical significance to studyaccounting supervision of derivative financial instruments.Following the theoretical basis of accounting supervision,the thesis analyzeshow to implement accounting supervision from the point of view of accountingstandards,internal control,external monitoring and auditing.Through analyzing theSociete Generale France fraud case and American subprime crises the thesis exploreshow to enhance internal control and how to exert the role of accounting to implementrisk management. In this paper the normative method is the main method and at the same time casestudy is used.The paper also describes the historical development of accounting ofderivative financial instruments.The accounting standards and supervision methodshome and abroad are compared.In the context that new financial instrumentsaccounting standards have been in force in our country,the paper seeks to contributein the following areas.1.Risk management of derivatives is one of the most important issues in ourcountry and the world,and accounting information is the basis of derivatives riskmanagement.How should we make use of accounting information system toimplement derivatives risk management? To solve this problem,this paper designs amonitoring system and carries out a study systematically.2.China has promulgated and implemented new financial instrumentsaccounting standards,but there are still some problems.In this paper some proposalsare put forward that can be the reference to amend the standards.3.The current financial crisis has far-reaching impact on our society.The thesissurveys the effect of accounting on the crisis with a view to control the systemicfinancial risks through accounting.4.The thesis put forward some strategies to implement accounting supervision ofderivatives in the background of the economic integration in the world and the globalconvergence of accounting standards.