Dispute And Harmony Between The Accounting And Regulation In Drawing Loan Loss Provision

Generally speaking, as an important property of the bank, the relief and reclaim of the loan affect the operation of a bank heavily. And it’s normal that when reliving and reclaiming a loan, the bank finds the loan lost, then it needs to draw loan loss provision to cover the loss in time. The bank is supposed to apply with both accounting rules and regulatory policies when drawing loan loss provision, and then tests whether the loan is lost. Finally, the bank assures the amount of the provision by a fixed set of approaches. Now what the question is lies that the conflicts exist between the accounting rules and regulatory policies in how to draw the provision. And the bank will get two different results after drawing the provision with both rules and policies. It is the conflicts that confuse the practical operation of the bank, and also affect the bank’s stable operating. What’s more important is that the truth of accounting information is hard to confirmed for the stakeholders. Under this condition does this paper do a research to the dispute and harmony between the accounting rules and regulatory policies in drawing loan loss provision. This paper takes the data of financial statements of 16 commercial banks as the object of the study. On the one hand, it confirms that the conflicts between accounting rules and regulatory policies truly exist. And on the other hand, it makes some suggestions for the relative branches’ reference so as to resolve the above question.This paper mainly adopts graph analyzing method, and it takes the data of financial statements of 16 commercial banks in 2012 and 2013 as the object of the study, then it reads the data of the loan loss provision to analyze. Otherwise, the paper does the horizontal comparison between the different banks with the above data, and points out the conflicts between the rules and policies. At the same time, this article tries to make the reason to the conflicts clear, and makes the relative advice to dissolve the single conflict.This thesis is divided into six parts. The first part presents the research background, the research meaning, the research content and framework, the research approach and the innovation and deficiency. The second part summarizes the theoretical basis of this paper and the past research to the relative conflicts between accounting rules and regulatory policies. The third part is a historical review to the accounting rules and regulatory policies of China, and an overlook to the current accounting rules and regulatory policies. As a core part, the fourth part proves the existence of the conflicts between accounting rules and regulatory policies in both theoretical and empirical demonstration, and gives out the article thesis. Specifically. the conflicts include three points:the scope of loans the loan loss provision needs to cover is different; the method of drawing loan loss provision is different; the meaning of drawing loan loss provision is different. The fifth part explains why the conflicts exist between the accounting rules and regulatory policies and gives out two points:the difference of the targets of accounting rules and regulatory policies is the fundamental reason; the reference of the foreign experiences is the direct reason. The sixth part is the summary of the paper. The financial department has done some efforts to resolving the conflicts between accounting rules and regulatory policies, for example, the financial department quotes the general provision and the five-level classification method in the accounting rules, and in this part does this paper raise some suggestions and advises.This paper holds that the accounting and regulatory department are supposed to make some efforts in the following aspects:a common standard should be formulated; the method of drawing loan loss provision needs improving; the regulation report should take the financial statements fundamental. Only if the conflicts between accounting rules and regulatory policies are resolved, the bank can draw loan loss provision reasonably, and the loan loss provision can be fully used in practical operation.