Research On Accounting Information Disclsoure Of Derivatives

With the formal disruption of the Bretton Woods system, the maintenance of the global economy, States began to adopt floating exchange rate system widely. Many countries have relaxed controls on the exchange rate of finance. In the international financial market interest rates and exchange rate fluctuated in a sharp. Correspondly, the value of the basic financial instruments resulted in a manner unprecedented volatility. International financial markets were also made a strong demand for risk-averse. Derivatives appeared in such an environment, it provides an effective means of hedging for the holders of the basic financial instruments. Derivatives developed rapidly in 20th century 70s,especially in the past 10 years, its scale enlarged unprecedented. However, Derivatives are also a risky, highly speculative financial instruments. In recent years, a series of crises and events that shocked the world were related with almost all derivatives transactions In recent years, a series of crises and events that shocked the world were related with almost all derivatives transactions:Bankruptcy of Barings Bank, Sumitomo Metal huge loss event, CAO huge loss events and United States Bankruptcy of three investment banks in the current financial crisis. In these cases, we cannot see any "indication" form the traditional financial reporting before the crisis, they still showed a good performance and healthy financial position. This will mislead investors, and to a large extent undermined the interests of investors. So, with the derivatives developing and applicating, the disclosure of the traditional financial statements would be increasingly inadequate. The reasearch on disclosure of the derivatives accounting is important for the improvement of the traditional financial statement disclosures.This paper is divided into three parts:The partⅠ(chapter 2～3):is an overview of derivatives and the impact of the traditional traditional accounting. made a basic introduction to derivatives from the angles of the definition of derivative financial instruments, basic elements and characteristics. Subsequently, made an analysis the impact of the traditional accounting by derivatives. First, the impact of the accounting elements. According to the conceptiong of the assets and liabilities, Future economic benefits must come from past transactions or events. Second, the impact of the accounting recognition. According to the traditional requirements of accrual accounting, Enterprises should recorded the impact of these business enterprises when they were accured, rather than when cash was received or paid record. Third, the impact of accounting measurement. The value of derivative held by any change in the period, should reflect the true phases, which will result in a serious historical cost measurement attributes of touch with reality, and thus lead to the historical cost basis for measuring the fundamental traditional accounting reports does not reflect the real situation, reduces the relevance of accounting information in decision-making. Fourth, the impact of accounting information disclosure, the impact of the accounting (including accounting elements) and accounting measurement by derivative financial instruments will eventually involve the traditional accounting reports.PartⅡ(chapter 4～5):The real impact of the traditional accounting by derivatives, the accounting adjustments, and the impact of accounting information disclosure after adjusting. Through the American Accounting Association, the U.S. Financial Accounting Standards Board, the International Accounting Standards Board statement on accounting objectives, we can see that decision-usefulness view to replace the concept of fiduciary duty of corporate financial reporting outside the primary objective. Therefore, the accounting academia the concept of the introduction of comprehensive income that includes realized gains and for the implementation of changes in equity. Use of fair value measurement, reflecting the uncertainty about the future consensus, closer to the true value of derivative financial instruments. The improvement of the disclosure of derivatives accounting information. The balance sheet and income statement logic is the direct cause of the collapse of a comprehensive concept of income and fair value measurement. The real reason is that traditional financial accounting model is not suit to the accounting changes in the environment. Therefore, the reconstruction and improvement of derivative financial instruments for financial and accounting statements of financial accounting system is the inevitable trend of development.PartⅢ(chapter 6～7):The improvement of the disclosure of derivatives accounting. For the improvement of the balance sheet, we should redefine the elements of balance sheet first, and then make the derivatives consistent with its definitions. We then analyzed the liquidity, monetary, core and four kinds of financial assets and liabilities of the project classification standards that the traditional lack of liquidity, and by the financial basis for classification. Finally, we get derivative financial instruments included in the table on the current balance sheet improvements according to the financial classification. To the improvement of income statement, we first get the introduction of a comprehensive concept of income, then take reference to the foreign dominant accounting pattern, and make recommendations by the base of our actual situation of China. Finally according to the above ideas, we put forward improvement of Balance sheet and owner of changes in equity.This article may have the following three points of innovation:(1)Currently, the research of China's derivatives accounting is mainly focused on the impact of the derivatives accounting to the traditional cycle of accounting recognition and measurement, but the research on disclosure of accounting information is too less. This paper discuss the impact, but also discuss the essence of this shock, and thus has studied the theory of derivative financial instruments.(2) Derivative financial instruments do not meet traditional definitions of accounting elements, This paper presents a response to the accounting elements of re-definition of the derivative financial instruments and others into the accounting statements(3) This paper put forward the improvement program of the traditional balance sheet and Income Statement.