Chinese Listed Banks' Derivative Accounting

The essence of financial derivative instrument is the contract. When the contract is signed, there is a big uncertainty of the possibility of occurrence in the future and the prize in the transaction. The uncertainty of a financial instrument is a crush to the traditional accounting theory. It can't be recognized as an asset or a liability. Either it can't be measured by a certain amount. People can just disclose it outside the financial reports. So the use of derivative instruments has coursed a lot of financial risks and losses and coursed a revolution of financial accounting. The bankruptcy of Bahrain bank made us realize that disclosing financial instrument outside the financial reports will conceal the risk so that the risk crowd, which will get us a horrible result. Meanwhile, it also can not reflect the reality of transaction and report the true financial information to the investor.As the economical globalization enlarges continually and the innovation of financial instrument increases fast, the financial derivative financial instrument becomes more and more diverse and complex. The revolution of financial accounting is inevitable. The purpose of this revolution is to found a new accounting system to disclose and present the message of derivative instruments that is useful to decision makers. FASB and IASB did a lot of research on derivative instruments and published several accounting published standards to form the market of derivative instruments. China has the new Accounting Standards recently and made the regulation of the recognition, measurement, disclosure and presentation of derivative instruments.The article starts with introducing the definition, classification and the character of derivative instruments. The article analyzes the crush that derivative instruments bring to traditional accounting theory and finds out that we should use other accounting standards to deal with derivative instruments. Then, the article analyzes how to regulate the derivative instruments by accounting standards in recognizing, measuring, disclosing and presenting. The article introduces the standard about derivative instruments of the new Enterprise Accounting Standards and compares them to the IASB. At last, the article concludes the influences to banks in China.The innovation of this article has following aspects: Firstly, when I analyze the financial derivative instrument, I research the situation of progress, audit and management of risk of financial derivative instrument basing the quantity of research. Secondly, I compare the foreign research , especially the IASB and FASB, with Chinese new principle of accounting to find out the progress and weakness of the new Accounting Standards. Thirdly, I research how the new accounting standard influences the transaction of financial derivative instrument. Finally, I explore and present my suggestion basing the national reality.The 1st part of the article introduces the basic situation of financial derivative instrument and the applying in commercial bank. The 2nd part of the article introduces the research of financial derivative instrument accounting. The 3rd part of the article researches the accounting in financial derivative instrument. The 4th part of the article researches the influence of accounting in financial derivative instrument and presents my suggestions.