A Study About Enforcement Mechanism Of Accounting Standards

The enforcement mechanism of accounting standards is as important as the accounting standards. The study about enforcement mechanism of accounting standards has an important meaning to resolve the theory and practice problems that are faced by the accounting field. These problems are the realization of accounting internationalization, the prevention of making false and the construction of high-quality accounting reports system. This dissertation uses the normative research approach, and studies the enforcement mechanism of accounting standards from the systematic and endogenous angles. The enforcement mechanism of accounting standards is regarded as a system formed by a series of game rules that is in order to assure the proper observance of accounting standards. This system is in a certain environment, and reaches the purpose that all participants observe accounting standards properly through the interdynamic effects of subjective beliefs and objective enforcements. Then from the definition and explain, four natures are known: systematicness, endogeny, history and goal-direction. In the aspect of exist reasons, this dissertation sets up a game model to search a environment which the managers enforce themselves, then expanses the assuming conditions and introduces the concept of incompleteness of accounting standards, at last argues that the participants and institutional environment'realistic problems and incompleteness of accounting standards are the basic exist reasons of the enforcement mechanism of accounting standards. Seven kinds of operation styles are introduced: 1.internal company accounting function, 2.internal corporate governance, 3.statutory audit, 4.assurance of the law, 5.court enforcement of the law, 6.institutional oversight system, 7.reputation and moral mechanism. Some classifications then are carried on to these operation styles. On the basis of classifications, the inside relations are described: the primary and secondary relation and complementary relation between the formal and informal mechanism, the corresponding advantage and disadvantage relation between the first, second part mechanism and the third part mechanism, the competitive and complementary relation between the national and private mechanism, the primary and secondary relation between the proactive and reactive mechanism. This dissertation analyses Chinese institutional environment, and points out it is unable to play a strong supporting and assisting role to the enforcement mechanism of Chinese accounting standards. This dissertation also analyses the realistic condition of the enforcement mechanism of Chinese accounting standards, and argues that each operation style exits many shortcomings, and the inside relations do not accord with inherent law, and from the systematic angle, the enforcement mechanism of Chinese accounting standards has a bad result with high costs. Finally this dissertation points out the improving directions of the enforcement mechanism of Chinese accounting standards, and the short-term, middle-term and long-term improving tactics are presented on the principle of "addressing both symptoms and root causes, addressing symptoms in short term, linking up in middle term, addressing root causes in long term".