Research Of Local Government Contingent Liability Accounting System Based On The Risk Management Theory

With the eruption of global financial crisis, sovereignty debt crisis successively occurred to western capitalist countries, which gave our government a wake-up call. As Chinese economic system reform goes further and positive fiscal policy continues to be implemented, the unreasonable division of power and responsibility between central and local government has enlarged the local government debt scale year by year. Besides, the contingent liability risks of local government appear, such as local government financing platform's risk. The fiscal risk caused by this situation can not be underestimated. Whether government accounting can provide real and complete debt information of local government not only affects the evaluation of the accountability about local government performance, but also affects the policy making to prevent fiscal risk. However, so far, the government accounting of our country is unable to satisfy the need of relevant information on local government contingent liability. Therefore, it is necessary to reform local government debt accounting system under the guidance of risk management theory. At present, the researches in this field are not further enough, so the author tries to establish a framework which includes accounting recognition, measurement and disclosure to reflect in an overall way the scale and risk level of local government contingent liability.The author mainly uses the normative research to explore this issue. The research is developed from two aspects, accounting and risk management to discuss how to build a local government contingent liability accounting system guided by risk management. Firstly, the author begins with current research at home and abroad to analyze the necessity of local government contingent liability research. Secondly, the author discusses several relevant theoretical basis of local government contingent liability which supplies a foundation for constructing the accounting. Based on the above, the author combines accounting process with risk management process to carry on a discussion from three aspects, accounting recognition and risk identification, accounting measurement and risk rating, accounting information disclosure and risk response. Thus, the thesis realizes the combination of risk management idea and local government contingent liability system to complete the first round of accounting circulation. Then, the thesis continues to follow the local government contingent debt risk project through the procedure of"Risk Supervision" to justify whether the project needs confirmation, etc. Thus, the thesis enters the next round of accounting circulation to form an effective and dynamic accounting system of local government contingent liability under the guidance of risk management theory. Finally, the research draws the conclusion and policy suggestion, and also analyses the contribution and shortcomings of the thesis.The main contribution of this thesis lies in theory innovation. The theory innovation is specifically reflected in the combination of the process of risk management and accounting when analyzing the local government contingent liability research. It brings in local government contingent liability project free from the budget into government accounting to reveal the potential local government contingent debt risk. It also provides decision support for local government before something relevant or contingencies occurs to evade the possible risks and maintain the local financial security.