Establishing A Mechanism For Preventing Distortion Of Accounting Information

Accounting information takes on growing importance along with economic development. Treating accounting information as a special information product, this thesis, which expounds from the standpoint of users of accounting information, examines existing quality problems of accounting information and the causes with reference to some cases in practical work and relevant existing material and literature. It sets out tentative ideas on establishing a mechanism for preventing distortion of accounting information and improving accounting statements to provide the users with more applicable accounting information as much as possible.Accounting information is the product of accountancy. The authenticity of accounting information is a prerequisite for accounting information to play its role. And only accounting information that meets quality requirements can satisfy the needs of the users. In reality, however, the authenticity of accounting information is often doubtable. First, the authenticity of accounting information is relative, and is defined within certain scope; that is, accounting information has a fuzzy aspect. Second, there are two problems in the existing accounting reporting system: it has inherent flaws, and it cannot meet the new requirements of the social and economic development. Third, accounting to value engineering (value = function /cost), for decisions made on the basis of tradeoff between efficiency brought about by information and cost, there is inevitably compromise of information. Besides the above objective flaws or unintended distortion, there is an important issue: frauds by the act of man.Distortion of accounting information not only misleads decision-making,but also tremendously impairs economic development and social progress. The causes are complex and comprehensive. And distortion of accounting information is not an issue concerning certain sector, enterprise or individual. The prevention of accounting information distortion should be directed toward the causes of the distortion so as to achieve satisfactory effect.In this paper, it is argued that prevention of such distortion, on the one hand, involves setting up and improving mechanisms for safeguarding the quality of accounting information; and, on the other hand, it involves improving the existing accounting reporting system. The author puts forward bold proposals in light of the needs of users of accounting statements, paying attention to the cost-benefit principle. Furthermore, some tentative models are presented for the new, more complex economic businesses arising from economic development and environmental changes, such as the model of mass communication reporting and the model of accounting information disclosure under the goal of sustainable development.