| Asset securitization is the most important financial innovation in international financial field in recent decades. It is structuring a transaction and transferring the 'cash flow producing', 'illiquid' asset to marketable securities. From the development of securitization abroad, the desired alternative in most securitization transactions is to structure the transaction that will result in off-balance sheet treatment for the existing assets. To structure a successful securitization transaction, the sponsor should design out more complicated contracts to scatter the risks and interests on the expected cash flow of the underlying assets and transfer the asset to a SPE to isolate the risk of transferred assets from other assets. In this process, if the transfer is accounted for as a sale and the SPE is unconsolidated by the sponsor, the sponsor can get the off-balance sheet treatment. So the derecognition of transferred asset and consolidation of SPE is the main problems on securitization accounting which have attracted the attention of sponsors and accounting standard-setters. This paper is focus on the two problems. With an introduction and analysis of the international accounting rules about it, the paper comes to a conclusion that the international accounting principles and procedures should be used to establish the rules in our county before the controversial issues in that rules are considered.This paper is divided into five sections. Considering the complexity of securitization transaction, an analysis of its characteristics is provided in the first two parts which is the preparation in probing into accounting problems of securitization. The first part mainly analyzes the concept of securitization and introduces the securitization process including the basic structure, participants and operation steps. Next the key techniques of securitizalion which is bankruptcy isolation and credit enhancement are described. The paper indicates that securitization is substantially a process of redirecting and redistributing the risk and interests on future cash flow of underling assets. Sponsor will take lots of advantages of using securitization, especially get the off-balance sheet treatment. In order to make further understanding on securitization, the second part emphasis on the three basic forms of asset securitization, pass-through securitization, asset-backed bond and pay-through securitization, with an analysis and comparison of their characteristics and cash flow features .The third and fourth parts are the focuses of the paper. The derecognition problem that transferred assets should be accounted for as a sale or as a secured borrowing and3related measurement are discussed in the third part. After evaluating traditional recognition mode including ris -reward approach, it focuses on the modern recognition and measurement mode: financial-components approach and recently research achievements of IASB: continuing involvement approach. Since the risks, rewards and right of control on transferred assets are usually departed from each other, the traditional recognition mode is obviously inapplicable in practice. Financial-components approach focuses on control and differentiates derecognition of transferred asset from recognition of new financial instruments arising from securitization. It is preferable to the traditional mode, but the inconsistencies and inevitable quantities identification also exists in the approach. Comparing to this, continuing involvement approach which focuses on 'no continuing involvement' and allows the transfer accounted for as part-sale will delimitate that limitations. Since the approach will usually treat a transaction as part-sale and part -loan, it could be acceptable in practice. However, the pair value measurement in the tow modes would make the gain-on-sale fluctuated.The fourth part mainly discusses the consolidation of SPE. Under current practice, consolidation based on voting interest is not appropriable for consolidation of SPE, since the SPE could be es...
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