A Study On The Economic Consequences Of Accounting Standards Setting

Accounting standards, which specify production and supply of accounting information,is a set of rules with economic consequence, instead of a simply technical means. This has been a major conclusion arrived at by western accounting circle in 1970’s. For the economic consequence of the accounting standards, people realize that the implementation of the accounting standards will have a definite influence on the interest distribution pattern among various interested parties. The issue or change of the accounting standards will become a concern for various interested parties, and promote their active participation. The published accounting standards should follow basic accounting principles while maintain their technical features. They shall take account of not only various interests but also possible economic consequence arising from their implementation. Only thus can their acceptability and enforceability be ensured so as to promote the improvement and development of the accounting standards system.In western developed countries, the economic consequences of the accounting standards result in a qualitative leap in people’s comprehension on the formulation of accounting standards, which drive the variation of the accounting standards to a certain extent. The formulating process of the accounting standards becomes even more rational and mature. As the socialist market economy system was established in our country, the accounting work has seen major changes. Looking back on the history of accounting reform and establishing of accounting standards in our country, we know that the economic consequence also made a great impact on the formulation of accounting standards. Because of economic globalization, the converging of accounting standards in the whole world prevails, which in turn also influence the formulation of accounting policy considerably. In the paper, the economic consequences of the accounting standards in our country are studied according to the background of economic globalization and actual condition of the market economy in our country, with special focus brought to the influence of the economic consequences in terms of the formulation of the accounting standards. The whole paper composes the following parts:In the Introduction, the background of the generation and development of economic consequences of accounting standards in the USA and our country is expounded. The significance of the economic consequences over the accounting standards is stated. Retrospect and summarization are made on documents investigating the economic consequences of the accounting standards respectively in terms of China and other countries.In Chapter One, the contract theory of economic consequences of accounting standards is elaborated, which forms the theoretical basis of the whole paper. First the basis concept of economic consequences of accounting standards is described, and then its courses are expounded in terms of the contract theory. It is pointed out that the economic consequences of accounting standards may lead to politicization in the formulation of accounting standards, which laid a solid theoretical basis for later study.In Chapter Two, historical investigation on the economic consequence of the accounting standards in the USA is conducted. The variation of American authority for enacting accounting standards, the evolution of the orientation in formulating of American accounting standards are described and several typical case of the economic consequence of the accounting standards in the USA is illustrated. It shows that economic consequences exert a continued influence on the formulation of the American accounting standards. Corresponding measures against the economic consequences taken in the USA is analyzed. The chapter serves as an effective verification to the theoretical analysis in Chapter One. In addition, it provides reference to the formulation of accounting standards in our country.In Chapter Three, it is based on the economy background of our country and the new accounting standards are its subject. The economic consequences of the new accounting standards are illustrated by the example of assets depreciation provision criteria. Theoretical analysis on the economic consequence of the accounting standards in our country is conducted and improvement measures are proposed.In Chapter Four, the international affect of the economic consequence of the accounting policy is analyzed in terms of economic globalization. The major economic consequences of internationalized accounting standards are characterized by internationalized income and cost. Competing for the right to formulate international accounting standards is an approach to maximize the interest of its own country. Upon analyzing of internationalized income and cost of the accounting standards in our country, the strategy of internationalization of the accounting standards is proposed.