Study On The Problem Of Accounting Information Distortion Of Companies In China

Accounting information is the basic reflection of enterprise information. It helps investors, creditors and stakeholder to make the dicision and it influence macroeconomic regulation and control. However, distortion of accounting information which exist in every country is getting more and more serious. In our China, distortion of accounting information in some corporation has done harm to the healty and fast development of economy. Public starts to pay a lot attention to how to avoid the distortion and to improve the quality of conrporation accounting information. To some level, Sarbanes-Oxley Act in America, Accounting Law of PRC, the Company Law of PRC, Audit Law of PRC, Securities Law of PRC and other related laws, regulations, accounting standards and accounting system play a positive role in avoiding and governing accounting information distortion. But, cases on financial fraud such as Qiong-mingyuan, Yin-guangxia etc. made thousands of investor be cheated and led to credit crisis. Distortion of accounting information always exists. The author wants to study on the problem of accounting information distortion which is becoming increasly serious in our country.In this paper, the author firstly explain what accounting information distortion is and introduce the related theory. Accounting information distortion is classified as. regular distortin, irregular distortion and behavioral distortion here and the author do the explaination respectively. Basic theoris include principle-agent theory, asymmetric information theory, internal control theory, institutional arrangements theory, which is the foundation of the following study and analysing.Then, we discuss the motive and hint of irregular distortion of accounting information. firstly, the autor respectively put himself into the shoes of state-owned enterprises, listed company, enterprises with foreign investment and private enterprises, then analyse the subjective reason as well as the hint of distortion. Secondly, we discuss the objective reason, which is the imperfectiong of accounting standards, the unclarity of property rights in state-owned enterprises, the problem of internal control, the unreasonable equity structure, the defect of corporate governance and internal control system. These factor provide opportunities for accounting information distortion. With the rich experience of auditting and forensic accounting, the author deeply analyse three related cases which are either listed compony or private enterprises to show the hazard of accounting information distortion, at the same time, we suggest to deal with the distortion in three ways.1. to perfect laws, regulations and accounting system;2. government should step up efforts to do the regulation;3. to improve corporate governance and to perfect internal control system.