Special Purpose Entities And Accounting Problem

Special Purpose Entities or Special Purpose Vehicles (SPEs or SPVs) are business entities formed for the purpose of conducting a well-specified activity. Although its history have no more than 30 years, for SPEs can satisfy some needs of the sponsoring entity, generating profits to the investors and giving an impetus to the economy, in the past 30 years its were widely used in all kinds of industries. However, if misused, its may damage the interests of the investors, interfering with the economy. Utilizing SPEs to hid losses, liabilities is the key reason for Enron's failure. In order to prevent it to be misused, the accounting standards-setters must develop special accounting standards for SPEs.With the asset-based securities in China, the SPEs have emerged in our country and we have launched accounting standards concerned.In this paper, First, I will introduce what SPEs are and its use; Second, I will introduce the concerning accounting questions and accounting standards of FASB and IASC, make comparison between them and draw beneficial conclusion to our accounting principles concerned; Third, I will introduce the asset-based securities in China and study the situation of the SPEs in China; And then, I will introduce Chinese concerning accounting standards and put forward our overview on this regard at the same time. At last, it summarizes the full dissertation, proposes innovation of this paper and insufficiency, points the trend of future study. This article aims at providing reference for the further development of SPES in China.