A Study Of Financial Statement Presentation Based On Accounting Conservatism

On October 16,2008, The International Accounting Standards Board (IASB)and the U.S. Financial Accounting Standards Board(FASB)issued Discussion Paper, Preliminary Views on Financial Statement Presentation, which took some changes on presentation. Although the Discussion Paper only includes some preliminary views that were agreed between the IASB and FASB, it maybe present the development tendency of financial statements in the future. Today the depkgsna of financial accounting standards becomes international consensus, which is translated into concrete action. In this international background, our accounting profession should take actively focuses on the Discussion Paper in order to promote our accounting standards and international accounting standards to become convergent.This Discussion Paper proposes a management approach to the format of financial statement presentation and allow more rooms for management discretion in deciding which line item should be included in the body of financial statements. This Discussion Paper developed three objectives of financial statement presentation, which are Cohesiveness Objective, Disaggregation Objective and Liquidity and Financial Flexibility Objective. The model is designed to make an entity's financial statements more useful by requiring entities to provide detailed information organized in a manner that clearly communicates an integrated (cohesive)financial picture of an entity.At present, all the researches were the preliminary views of Discussion Paper in the accounting field made. This paper firstly studies the effects of financial statements when the presentation was changed by Discussion Paper, which is an innovation. The paper selected accounting conservatism as a indication to measure the quality of accounting information and used the standard method to study financial statement presentation from two aspects. One hand, study the changes of accounting conservatism based on accounting information supply-side. On the other hand, analyze the effects of accounting conservatism from accounting information demand-side. The findings of this paper show that management approach put more management purposes and professional judgments into presentation, which improve the subjectivity of financial statements. The Discussion Paper weakens the strength of accounting conservatism, at the same time adds to the difficulty of evaluation based on accounting information demand-side. The paper may have great theoretical and practical significance for our accounting standards to achieve a convergence with the international accounting standards.