Research On The Transparency Affected By The Leases Arrangement

Since the SEC used the word "Transparency" in the statement "SEC Statement RegardingInternational Accounting Standards" in April 1996, the transparency has been used as a coreconcept, when SEC and the chairman Mr. Arthur Levitt discuss the issue of "high quality"accounting standards. In 1997, the Asia financial crisis broke out, the UNCTAD show that theextent disclosure deficiencies and non-transparency of financial statements were responsible fortriggering the East Asian financial crisis. Toward the end of 2001, the Enron collapsed within amatter of months. This event acted as a catalyst—especially after it was rapidly followed byother high-profile business and financial reporting failures, including those at WorldCom andAdelphia —and raised many questions about corporate governance, the audit process, andfinancial reporting in general. It was found that only the qualitative characteristics of accountinginformation can not meet the need of high-quality accounting information, and it is necessary toget a more extensive and integrated concept to describe the quality of the accounting information,so the concept of transparency come into being.The current standards classify the leases transaction into finance lease and operation lease, whichmake the arrangement with similar economic substance present differently in the balance sheet.In the practice the entity structures the lease contract to prevent the obligation related to the leasebeing present in the balance sheet. All these affect the relevance, reliability and comparability,that is the transparency. In this thesis we discuss the issue mention above and bring out thecountermeasure to promote the transparency of accounting information.