Research On The Influence Of Hedge Accounting Standards Reform To Accounting Practice

As the progress of financial liberalization and innovation, hedge activities come to boom with the appearance of derivative financial instruments in the financial market and enterprises increasing demand of them. As a result, IASB and FASB issued IAS39and FAS133respectively to regulate the accounting treatments of enterprises’hedge activities. However, some problems start to appear during application of the hedge accounting. Especially after the financial crisis in2008, risks in the financial market arouse people’s more attention. People start to attach more importance to the practicability of hedge accounting and its influence on the corporate performance’s vibration after application. Therefore, a large-scale reform of the active international standard IAS39starts to come out.As well as the international hedge accounting standards, there are also some problems in CAS24. For example, the accounting recognition’s criterion of hedge relationships is too harsh and rules-based and the standards application is too complicated. All these problems may impede the development of hedge activities and the hedge accounting standards’utilization in our country to some extent. And also, they influent the effects that enterprises manage risks with hedge tools. The drawbacks lead to the necessity of reform. In the context that CAS is converging with IAS, it is important that we study the international hedge accounting standards’ reform and its impact on accounting theory and practice.Therefore, this essay tends to study the latest news of IASB’s reform of hedge accounting standards and its effects throughout5years with standard research. This essay will summarize the hedge accounting standards’reform, comment on the problems that the active hedge accounting standards have, and conclude that the key point of this reform is to simplify the hedge accounting standards treatment and to enhance the applicability. It finds out the problems that the active hedge accounting standards brings during its application in the practice by studying the cases that public companies using hedge accounting standards. Also, the article analysis the possible effects that this hedge accounting standards’ reform may cause, and make suggestions for CAS24to refer to the newest achievement of the hedge accounting standards reform.This essay includes6parts as follows:The first part, introduction. This part introduces the background and significance of choosing this issue, summarize the relevant documents, proposes research contents and research methods, and points out the breakthroughs and limitations.The second part, research foundation of hedge accounting standards. Elaborate the theory of hedge activities and hedge accounting standards, explain different opinions on hedge activity goals, explain the orientation theory on standard setting, and summarize the principles and direction of hedge accounting standards reform based on hedge motivation.The third part, problems existing in hedge accounting standards and the reasons of reformation. This part analyzes the defects of the existing standards and the relevant effects to financial information, and then explains the necessity of standard reform combined with case studies.The fourth part, the latest news of IASB hedge accounting standards reform and its possible effect. Summarize the international reform history of hedge accounting standards, analysis the changes from IAS39to IFRS9, compare the improvement of the latest international hedge accounting standards relative to CAS24so as to lay the foundations of using newest theory of hedge accounting standards’international reform for reference and solving the existing problems that CAS24has.The fifth part, comment on hedge accounting standard reform and its expectations. Collect date of public companies for theoretical support, make the reconfirmation and measurement with IFRS9, and compare the results with CAS24so as to analysis the expectations of this reform. Evaluate this reform from both positive and negative aspects.The sixth part, enlightenment on the hedge accounting standards reform. Discuss china’s hedge accounting standard setting and improvement, explore some actions that relevant department should take to adapt to the hedge accounting standard reformation to perfect China’s hedge accounting practice.