The Study On The Fair Value Application Of Financial Instruments In China

Since1970s,with the impact of the floating exchange rate replaced fixed exchange rate and financial liberalization,risk in the financial market and uncertainty has increased dramatically,people started to consider that whether the cost or cost-based measures were appropriate or not for financial instruments’measurement. In order to strengthen the regulation and oversight of financial instruments,the measurement of financial instruments becomes a difficult problem and hot topic in accounting for every country in the world. With the national accounting standards-setting bodies gradually in-depth study on the fair value of financial instruments,measurement of financial instruments more and more inclined to introduce fair value measurement attribute. After the outbreak of the subprime mortgage crisis,fair value measurement attribute had been criticized by some financial institutions who had losses. Discussion on the fair value of the financial sector with the accounting profession started again. FASB and IASB took immediate measures including modifying the fair value hierarchy to improve its measurement and emending the requirement for reclassification of financial assets. The dynamic situation is of great value for China,to learn from international experience and select is essence call help China ensure the consistency with international standards.China’s new accounting standards issued on February15,2006,the fair value of the re-use became one of the highlights of the new guidelines.The paple believe that the application of fair value is a symbol to adapt to the economic development needs. Although there are guidelines imperfect or the use of the practical difficulties of the fair value measurement,they can not reverse the use of fair value measurement.The paple hope that through this analysis,found defects of China’s fair value measurement of financial instruments,at the same time learn from foreign advanced experience and measurement techniques,put forward the suggestion of line with our measurement practice improvement,provide a reference for the fair value to its better application in the future.According to analysis of the question,the logical sequence to solve the problem,using a standardized-study approach and chart analysis ofresearch.It consists of five chapters.Chapter one:Foreword,mainly introduces the research background and significance of this article.As well as the fair value of domestic and foreign research results were reviewed,which put forward the ideas and methods of this research.Chapter two:Theoretical analysis of this article.First,the concept of fair value and theoretical development are discussed. Second,the concepts and theories of financial instruments are cxplored,and then,described IFRS and FAS on the application of the fair value of financial instruments.Chapter three:Mainly fair value in China’s financial instruments in the application of theoretical analysis of the problems. That is, fair value lacks of reliability and operability,classification of financial instruments is not clear,fair value of financial instruments is difficult to obtain and measured at fair value easily lead to inaccurate financial results. The status of use for our financial instruments measured at fair value,it’s easy to analyze the reasons of the above problems can be divided into the following five points:the first is China’s financial instruments standards imperfect;the second is fair value becomes new tool to manipulate profit;the third is The overall low quality of the accounting staff;the fourth is our country market environment and conditions wasn’t perfect enough. On how to solve these problems,improve the fair value of the use of financial instruments in our country,improve the use of the enviroment,and better promote the use of fair value in our study of this core issue.Chapter four:The fair value of financial instruments in the foreign countries on China’s financial instruments use and inspiration. In the case of China’s national conditions,learning from foreign advanced achievements and experience,can promote the development of China’s fair value of financial instruments.Chapter five:The appropriate counter measures what issues in the chapter three.There are mainly five areas.The first is to enhance the training of relevant person,there are accounting,risk management and managers at all levels;The second is to improve the fair value valuation techniques,from the valuation model to the valuation rules should be further improved;The third is to build a sound financial instruments measurement system,which relates to the measurement criteria of financial instruments,market environment for financial instruments and disclosure of financial instruments;The fourth is to establish a financial instruments risk management mechanisms;The fifth is to strengthen the audit system of fair value,including to improve and refine the criteria and methods.