What Is the Financial Result?

The financial reporting system refers to a more complete system that provides information on the financial status, operating performance, and cash flow of an enterprise from different aspects. The integrity of the financial reporting system directly affects the quality of the financial reporting information.

Financial reporting system

Right!

Financial reporting system refers to providing from different sides

Limitations of the current financial reporting system

In the constantly changing objective environment, although China's financial reporting reform has also made progress, it still lags behind the needs of the development of the situation, and its limitations have become increasingly obvious, mainly as follows:

1. Report targets are overemphasized as national

Principles of financial reporting system reform

In order to achieve the goals of financial reporting, the following principles should be followed when reforming the financial reporting system:

1

Reform direction of financial reporting system:

Financial reports reflect the financial status of the company,

Case Study of Financial Reporting System

Case 1: On the improvement of the current financial reporting system of public institutions [3] Under the macroeconomic background of the continuous reform of China's fiscal budget management system, profound changes have occurred in the internal and external environment of financial management of public institutions, such as the need for financial information to meet different levels The needs of different purposes; creditors need to provide timely debt repayment information to public institutions; government departments need to provide macro-control information in a timely manner; in order to assess business performance, public institutions themselves provide the basis for investment decisions and fundraising decisions, and need to be correct and objective Reflect financial results. However, at this stage, the financial reporting system of public institutions in China has not been able to meet the above requirements, which has restricted the scientific development of public institutions to a certain extent.

I. Financial reporting system of public institutions

The financial report of the public institution is a summary written document that reflects the financial status and operating results of the public institution.It is not only an important piece of accounting information for the user to understand the development of the public institution, formulate policies, or guide the implementation of the unit's budget, but also prepare the financial revenue for the next year Support plan basis. Generally it consists of two parts: accounting statements and financial statements.

Accounting statements are prepared through summary and arrangement based on daily accounting information. It is a written document that reflects the financial income and expenditure of the accounting statement preparation unit within a certain period of time, including the balance sheet, income and expenditure statement, infrastructure investment statement, schedule and notes to accounting statements. What needs to be mentioned is that for units with special revenue and expenditure business, they should also compile a statement of revenue and expenditure of special funds according to the requirements of the financial department or the competent department.

The purpose of the financial statement is to explain the income and expenditures, savings and distributions of the public institutions, and changes in assets and liabilities; if there is a significant impact on the financial status of the current period or the next period, events may occur. Make a brief and truthful description. At the same time, you need to explain what results have been achieved with the use of business funds and income, and other matters.

2. Disclosure requirements for financial information of public institutions

The "Accounting Standards for Public Institutions" stipulates that financial information should meet the requirements of national macroeconomic management, meet the needs of budget management and related parties to understand the financial status and income and expenditure of public institutions, and help public institutions strengthen internal economic management. Specifically, the information function of public institution finance has three main aspects:

The first is to provide services for national macroeconomic management and decision-making;

The second is to provide relevant state administrative departments and other providers of public institution resources, provide the budget implementation, income and expenditure, financial and change status of public institutions, and provide relevant information for main work performance;

The third is to provide financial management related information to various management departments within the unit. Therefore, the financial report of the public institution is the most important carrier for providing the above financial information.

The American Financial Accounting Standards Board's (FASB) regulation on "non-profit organization financial reporting tasks" states that: to current and potential resource providers and other information users in determining the resources of non-profit organizations, assessing the organization's capabilities The services provided and the ability to continue to provide them, financial assessments should provide sufficient information when assessing the position of the organization's managers and other aspects of the work, i.e. providing information on economic resources, debt and net resources, as well as transaction results, projects, Information on changing resources and the environment, providing information on the organization's performance during the accounting period (including the amount and form of the organization's net resources, and the effectiveness and completion of the services provided), and how the organization can raise, pay cash or other liquid resources , Borrowing and repayment of borrowings, and other information that affects the organization's liquidity factors, thereby helping information users to better understand the interpretation or annotations of the financial information provided.

Compared with the accounting reporting requirements of non-profit organizations stipulated by the Accounting Standards for Institutions of the United States and the Financial Accounting Standards Board of the United States, although their tasks are different, there is no obvious difference in the requirements for financial reporting information of institutions (non-profit organizations). Specific requirements are:

(1) In order to meet the needs of information users, financial reports must be authentic, complete, fair, easy to understand and consistent with the principles of quality;

(2) The content of the financial report should at least include: the revenue and expenditure of the public institution and its financial status and changes, the implementation of the budget, the main performance and management, and other auxiliary information.

Problems with the current financial reporting system of public institutions

1. Can't meet the requirements of diversification of investment entities on the disclosure of financial report information

With the emergence of a diversified pattern of investment entities in public institutions, financial information should meet the needs of different levels and different purposes. For example, creditors require public institutions to provide information on whether they can repay their debts on time; equity capital investors require information on the preservation and appreciation of invested capital; government departments require information on the development of public institutions in order to conduct macro-control; Operating performance requires a correct and objective reflection of the financial situation, providing a basis for investment decisions and funding decisions, and so on. China's public institutions now implement a unified format of financial accounting statements, which has changed the type, content and format of financial statements of public institutions in different business units in the past.Although this is conducive to the consolidation of statements and the unification of statement indicators, it is uniform The report mainly considers the needs of government departments for related information, and relatively ignores the needs of internal managers of public institutions and other information users for related information, so that the diversification of investment entities' requirements for financial reporting information.

2. Unreasonable balance sheet design

The financial statements of institutions are mainly composed of "balance sheet" and "general income and expenditure". The balance sheet is a static reflection of the financial status of a public institution. It reveals the specific source of funds and the specific distribution of funds at a specific point in time.The total income and expenditure statement reflects the existence of a certain item or a group of items on the balance sheet. The changes before and after different points in time, that is, how to change from the situation at this point to the situation at another point in time, so as to dynamically reflect the financial status of the public institution.

However, the `` Accounting System for Institutions '' stipulates that the design of the monthly or quarterly asset format combines the static (asset, liability, and net asset) elements and the dynamic (income, expenditure) elements in a single table to reflect, in the same form as the account balance summary table.

This combination of disclosure of financial status information and business results information confuses the nature of accounting information at the time and time point, and increases the ambiguity of accounting information. At the same time, a piece of income or expenditure is not only reflected in the balance sheet, but also revealed through the income and expenditure statement, which makes the content of the two statements repeated, and also artificially complicates the balance sheet.

3. Information on fixed assets in the report is incomplete

The fixed assets of an institution are only valued at the original cost or replacement cost, but the fixed assets are constantly used, worn, and consumed over time. In the balance sheet, fixed assets are reflected at historical costs, and the corresponding fixed fund subjects only reflect historical costs, and do not reflect the impairment and wear and tear of fixed assets, which inflated the total amount of assets; at the same time, fixed assets Without depreciation, the cost of carrying out business activities does not include depreciation charges, making the cost accounting incomplete and reducing the cost of public institutions. Before the fixed assets are scrapped, the book value is always the same, making the book value greater than the actual value, the actual account does not match, and cannot reflect the unit's true financial status. When the public institution conducts business activities, corresponding expenditures must be incurred, and the loss of assets should also be included in the expenditure. However, because the public institution does not accrue depreciation of fixed assets, it instead draws a repair fund according to a certain percentage of income, and the repair fund increases. The amount is not directly related to the loss of fixed assets, and the repair fund has become its source.

4. Lack of cash flow and changes

For the diversification of funding sources of public institutions, financial funds will only account for a certain percentage of the funds for the development of institutions. Most institutions need to participate in various market economic activities, so that they have a certain degree of autonomy in financing and investment activities. Under this background, grasping the cash flow of public institutions and forecasting their future cash flow will become important accounting information necessary for the internal decision makers of the unit to make financing and investment decisions. Not only that, for users of accounting information external to public institutions, such as banks that provide loans to public institutions, in order to evaluate the solvency of public institutions, they also need to understand the information about the cash stock and flow of public institutions.

The lack of a cash flow statement in the accounting statement system of public institutions, which cannot completely and accurately reflect the cash flow and its changes, has not been conducive to the unit's internal decision makers to make correct financial decisions, and it is not conducive to external information users to correctly judge the public institutions. Changes in cash.

5. The subjects and statements of the special fund are not reasonable

Special funds refer to funds that are drawn by institutions according to regulations and have special purposes. They mainly include repair funds, employee welfare funds, medical funds, housing funds, etc. The current financial system classifies them as the net assets management of institutions. However, the special fund accounting in the current accounting system of public institutions is neither a fund account in the true sense nor a net asset of public institutions, because, in essence, they are elements of the nature of liabilities, which has caused hidden risks in fact. Sexual debt.

Withdrawal of special funds in the current financial reporting system of public institutions, there is only a very simple "table of changes in fund changes" in the use of expenditures, which can only reflect the annual increase in unit special funds, how much expenditures, and How much is left, as for what the special fund has done, where it has been used, and how the results can not be reflected, so that the financial department and superior authorities cannot effectively manage and supervise the special funds.

Discussion on the Reform of the Current Financial Reporting System of Public Institutions

Thoughts on reforming the current financial reporting system of public institutions: Improving the quality of financial reporting information of current public institutions, so as to not only facilitate the summary of statements and the unity of report indicator calibers, but also meet the relevant parties' requirements for public institution financial report information as much as possible. demand. For this reason, without changing the overall structure of the current financial report, the composition of some statements can be changed, and some statements can be supplemented.

1.Improving the balance sheet

The balance sheet is a statement that reflects the financial status of a public institution on a specific date. It belongs to the category of static accounting statements, but the monthly balance equation of the current balance sheet is based on "asset + expenditure = liability + net assets + income". A dynamic accounting equation was prepared, which actually turned into a balance of accounts, and the contents of the accounting statements did not match their names. In order to match the name with the actual situation, the balance sheet balance formula of the institution "asset + expenditure = liability + income + net assets" should be changed to "assets = liabilities + net assets" and the income and expenditure items should be cancelled to enable the table to It truly reflects the financial status of the public institution at a specific point in time. After the income and expenditure items in the balance sheet are deleted, their net amounts are reflected in the "net assets" section of the balance sheet.

The adoption of the changed balance sheet formula will not only help to clearly distinguish the increase and decrease of creditor's equity and net assets in accounting, but also reflect the status of the accounting entity of the public institution, and fully reflect the financial status of the public institution. To provide useful information for government macro management and economic management of public institutions.

2.Improve the fixed asset accounting method so that the report can fully reflect the fixed asset information

In order to truly and comprehensively reflect the asset information of the public institution, the public institution shall depreciate its fixed assets, that is, cancel the repair fund accrual system, establish a public institution depreciation accrual system, and cancel the "special fund-repair "Acquisition fund" subjects, the "accumulated depreciation" and "net fixed assets, original value of fixed assets" columns are added to the asset side of the balance sheet, and the "fixed fund" of the net asset side is reflected as the net value of the fixed assets. Since the purchase and construction expenditures of fixed assets of public institutions have been directly accounted for in the current period of purchase and construction, public institutions should no longer be accounted for as expenses when accruing depreciation of the same fixed assets, and can be directly offset to the "fixed fund".

When accruing depreciation expenses, keep in mind:

Borrow: Fixed Fund

Loan: Accumulated Depreciation

At the same time, under the "fixed assets" item in the balance sheet, additional items such as "original value of fixed assets", "accumulated depreciation" and "net fixed assets" were added to truly reflect the value of fixed assets. Through the above processing, the net value of the fixed assets of the public institution can be relatively truly reflected without changing the basis of the current accounting system for realizing the receipts and payments of public institutions, and the assets and net asset values reflected in its balance sheet information are also related to the actual value. Match.

3. Set up cash flow statements for institutions

The cash flow statement reflects the source of cash inflows, the purpose of cash outflows and the balance of cash at the end of the reporting period. Because the information provided by the cash flow statement is mainly used for public institution investment, fund-raising decisions, and external information users' evaluation of the public institution's debt repayment ability, its role in macroeconomic decision-making is limited. Therefore, the cash flow statement may not be used as a summary report. It is only used by internal managers of the unit, financial institutions that borrow from institutions, and other users of related information. In view of the complexity of the situation of public institutions in China, the preparation of this table is not suitable as a mandatory requirement at present, but those institutions that have participated in market investment, financing or operating activities have reached a certain scale should be advocated in order to explain the source and use of cash as a countermeasure. Supplementary notes on the balance sheet and income and expenditure statement.

Due to the differences in the source of income and its composition, the content and method of cost accounting, the formation and distribution of balances among public institutions, there are obvious differences compared with enterprises, which directly affects the classification of cash flows and the preparation of the cash flow statement of public institutions. The method naturally has its particularity. Specifically, according to the characteristics of the public institution and the actual situation of the cash flow project, the cash flow of the public institution should be divided into cash flows generated from business and other activities, cash flows generated from investment activities, and financing. There are three types of cash flows from activities.

(1) Cash flows from business activities and other activities, which mainly include financial appropriations, superior subsidies, business income, accepting donations from units or individuals, and providing labor services (such as conducting scientific research, technology transfer, academic exchanges, scientific popularization, management Services, project contracting, etc.) Operating cash flow, purchase of materials and supplies, and receipt of labor services.

(2) Cash flows from investment activities, which mainly include obtaining and recovering investments.

(3) The cash flow from financing activities mainly includes external borrowed money and debt repayment. When compiling, each type of project should be simplified as much as possible according to the characteristics of the public institution, and the data reported should be easy to obtain. It should be emphasized that the cash flow statement prepared by the public institution cannot fully apply the concept of cash in the Enterprise Accounting System, nor does it necessarily divide the cash flow in the table into three categories: operating activities, investment activities, and financing activities, which can simplify Processing, but should include relevant content.

4. Reform the subject setting of special funds and set up a special change table

To improve the setting of special funds, you can cancel the special fund accounts, set up special accounts payable, and change the change in the fund increase and decrease table in the statement to set up special changes in payable tables. In this way, all payables can be accurately reflected in liabilities, and a special change table of payables can be set up to turn hidden liabilities into explicit liabilities, which can make the financial information reflected in the accounting statements of the institution more authentic and complete, which is beneficial to users of the statements Get relevant financial information.

Although the public institution is essentially a non-profit organization, with the development of the market economy, the public institution is more closely linked to the market. This reality makes the current Accounting Standards for Institutions (trial) and the Accounting System for Institutions to some extent limit the connection between institutions and the market. From a financial management perspective, its financial reporting system has been exposed There are many problems. The project is unreasonable and does not meet the requirements of the reform of the fiscal budget system; the information reflects untrue and incomplete, and the information disclosed cannot meet the requirements of relevant stakeholders. In order to align the economic activities of public institutions with the realities of China's market economy, actively promote the improvement of the current financial reporting system, actively adapt to the requirements of the state treasury centralized payment system, and establish and improve a business financial reporting system that meets the requirements of the market economic system; Information users provide timely, accurate, and useful information to meet the needs of the growing accounting of public institutions and promote better development of public institutions.