Research On Professional Judgment In Accrued Liability Accounting

The financial statements rely on the process of accounting professional judgment, which means how to confirm, measure and disclosure the transaction. Since accounting professional judgment is influenced by a variety of factors, internal or external, subjective or objective, it may lead some behaviors such as earnings management to affect the quality of financial statements. Therefore, the accounting professional judgments desiderate the standardization guidance of government and internal controls. Since accrued liabilities caused by contingencies need much subjective estimation, the article expects to research the accounting professional judgments of accrued liability. So it would explore the status to find some problems, and put forward the principle of accounting professional judgment in accrued liabilities, and then provide improvement project for it, which would promote our country to formulate the framework and reference guide details of professional judgment.This paper sorted the existing literature, respectively reviewed the related literature of accrued liabilities and accounting professional judgment. Most studies on accrued liabilities at home and abroad mainly focus on the disclosure condition and the uncertain effects of accrued liabilities. At the same time, the studies found that the uncertainty of the accrued liabilities may be an effective tool for earning management just like asset impairment loss. For the study of accounting professional judgment, objective and fair accounting professional judgment has the positive market reactions. Many scholars studied about how to optimize the accounting professional judgment, and found that a good framework for professional judgment and reasonable internal control can effectively optimize the accounting professional judgment. But there are few scholars combined with internal control and accounting professional judgment framework to provide improvement project on a specific report project for the financial personnel.On the basis of literature review, this paper made the definition of accounting professional judgment clear, and cleared up the relationship between accounting professional judgment and execution behavior of accounting standards and the quality of accounting information. This paper also analyzed the influence factors of accounting professional judgment. Finally this paper build the guide which suitable for the professional judgment in accrued liabilities accounting by combining the framework for professional judgment in the financial reporting issued by association of chartered accountants in Scotland in 2014 with professional judgment points in accrued liabilities accounting.Based on the data of accrued liabilities, disclosed in A-share market in our country in the end term from 2012 to 2014, the statistical analysis find that accrued liabilities confirmed was mainly concentrated in the C-manufacturing and the common projects of accrued liabilities are mainly "quality assurance", "pending litigation", "disposal fee" considering both the quantity and amount. Meanwhile, although the criterion regulate the disclosure of accrued liabilities, China’s listed companies exist many problems, for example, they underestimate the "possibility" of the outflow of economic benefits, and can’t classify the accrued liabilities accurately,even the formation of the liabilities is not clear.By analyzing the three common cases, we find that the confirmation of accrued liabilities is lack of objective evidences, and there are no reasonable measurement models. Therefore, accrued liabilities become a means of earnings management because of its uncertainty and judgment.Finally, in view of the problems existing in the professional judgment in accrued liabilities accounting, this paper puts forward the improvement scheme based on the guide which suitable for the professional judgment in accrued liabilities accounting. Combing the overall train of thought as the theoretical framework, and combining with the research of the GL company actual situation, this paper expounds the implementation process of the scheme should be in detail.This article mainly has the following two innovations:(1) This paper combined the data statistical analysis with the case analysis of listed companies and the survey analysis of small business, found the problems existing in the professional judgment in accrued liabilities accounting, including but not limited to the lack of objective evidence in accrued liabilities’confirm, not yet formed a reasonable calculation model in accrued liabilities’reliable measurement as well as the disclosure is not standard;(2) After the case analysis, this paper puts forward the improvement scheme based on the guide which suitable for the professional judgment in accrued liabilities accounting.