International Comparison Of Accounting Treatment For Sponsors In Asset Securitization And Specific Applications In Practice

Asset securitization was born in the 1970s in the United States and was rapidly developing before the financial crisis. Compared with the booming development of asset securitization in America, China’s securities business grows slowly. The accounting principles of asset securitization, in particular the accounting principles of sponsor in academic and practice are still not perfect. Up to now, principle designed to guide the asset securitization business is only the "pilot assets accounting rules to securitization of credit asset" issued by Ministry of Finance and State Administration of Taxation, there are no specific accounting standards to special kind of credit asset securitization or new deal structure.This article is divided into three parts, the first part starts from the development of asset securitization in United States and China, including comprehensive comparison of accounting standards on asset securitization accounting treatment of the sponsor between US GAAP, IAS and China, focusing on the differences of accounting recognition, accounting measurement, information disclosure and reporting requirements of SPV. This section is emphasis on the explanation of "financial synthesis rules," "continuing involvement rules" and "risk-reward transfer rules", in conjunction with the particular developing stage of asset securitization in different countries. The second part of this paper, combined with the current practice in the accounting treatment for the practice of sponsor, creatively analyzing motivation of the accounting treatment from the perspective of sponsor’s property, the underlying asset’s classification, market acceptance and regulatory guidance., the problem above was explained by the "risk return transfer model" which is widely used in practice. In this section, the paper is focusing on the basic method and instrument of accounting agencies in practice. The third part of the paper is summarizing the problem in practice and making suggestions, such as reforming accounting recognition method, making additions to existing accounting principles and improving disclosure requirements of accounting information.This paper focuses on the analysis of sponsor’s accounting standards in mature markets such as the US GAAP and International Accounting Standards. Coordinated with the practice of our country, the paper makes suggestions as reforming accounting recognition method according to "financial synthesis rules", making specific accounting standards according to different sponsors and underlying assets, considering making instructional model to guide accounting judgments, refining accounting information disclosure principle of asset securitization especially in aspects besides risk information.In this paper, the main method of study is comprehensive comparison, illustration and description to analyze asset securitization accounting principles. To make the conclusion more understandable, the article make elaborated example by using graphic charts, combined with experience in practice.