Study About The Earnings Management And Internal Control Self-Assessment Of Long-term Equity Investment Of Listed Companies In China

One of the objectives of internal control is to ensure that the accounting information and related information is true and complete, which is consistent with the goal of improving accounting standards. Chinese Treasury Department issued new accounting criteria for enterprises in 2006, which includes one basic norm and 38 specific norms. Compared to the former accounting system, "accounting standard 2- the long-term equity investment" shows great discrepancy in its range, content and follow-up measurement, which embodies the tendency of convergence with international accounting standards and increases the quality of accounting information. After the criteria revised, the change on accounting of long-term equity investment caused some economic consequences for companies. The emergence of new risk makes new variation for listed companies to utilize long-term equity investment standard to manage earnings, whitewash financial statements, and even practice fraud, and the risk of accounting information quality increases, this not only increases the difficulty of the enterprise risk management, but proposed new requirements for internal control. Therefore, establishing internal control system actively for long-term equity investment and implementing necessary internal control self-assessment can promote management authority to find defects of internal control on investment and improve internal control to achieve management goal of enterprises. This makes the paper has important significance for deepening the theory and practice of accounting.This study is divided into the following aspects:Firstly, this paper hackles main changing points of long-term investment criteria since 2006 using comparison method; Secondly, analyzing the economic consequences of the revised guidelines, the possibly existing earnings management activity, and putting forward the key points of internal control for long-term equity investment and its method and content accordingly; Moreover, checking disclosure situation of internal control self-assessment report in sample companies and their long-term equity investment accounting quality by empirical study, and finding that the disclosure have no clear influence on profits of the investment; Finally, this paper putting forward my policy suggestions to the problems existing in self-evaluation of long-term equity investment internal control in Chinese listed companies.