Research On The Consolidation Standard Of Special Purpose Entity Through ENRON's Case

The bankruptcy of the Enron Corporation which happened in November 2001 became a heavy bomb of the United States economy since 1990's, which also arose many reformation and issues later, among which the most important problem associated with its abuse of Special Purpose Entity (SPE). Because its great influence of financial statement, this paper aimed on making researches on accounting rule of SPE through Enron's case, also getting some effective suggestion for China considering this derivative financial instrument will be introduced into China quite soon.In the preface , I first introduced the research backgrounds research purpose and method of this paper.In chapter 1, I explain the definition of SPE, introduce its legal structure and function, and then analyze the possibility that the consolidation rule of SPE would transfigure the financial statement. The last part of this chapter, takes example for Enron's case, introduces the typical model process of setting up SPE, and combined to point out how manipulation of financial statement with SPE by use the failure of accounting standard on consolidation.Chapter 2, introduces the general provision of FASB on consolidation rules of Special Purpose Entity, and points out its deficiencies.After Enron's case, the public of the United States all began to doubt the consolidation rule of SPE, naturally, the reform of it became the focus. It also becomes the most important part of this paper. In chapter 3, a debate on the basis of accounting standard was introduced: one is Rule basis representative by FASB, the other is Principles Basis representative by IASC. At the same time, analyze the institutes which in charge of making accounting standard, and then draw a conclusion the tendency of accounting standard reform is keep "a subtle balance". Also according to the tendency,give a detail introduction on the accounting standard of SPE after Enron's Case.After the complete discussion about accounting standard of SPE in the first three chapters, I try to forward some suggestion on the relevant issues of China on the basis of the research of others. Considering the comparability between SPE and related parties trade in China, the last part of this paper will learn from the failure of accounting standard of SPE, and then give some advice on the accounting standard making and accounting information disclosure in China. Also hope this paper can give a useful reference to the reform of the existing accounting standard in our China.