Research On Accounting Supervision And Control Over Enterprises Derivative Financial Instruments And The Risks

The fast development of international financial market and the evolution of financial risks management theory and practice drive the innovation of financial instruments, especially the derivative financial instruments. Under this background, the investment and operation environment of enterprises changed radically. Derivative financial instruments bring the market both great opportunity to gain profit and negative impacts. The evolution of accounting for derivative financial instrument leaves behind the fast development of financial instrument innovation. Both the accounting theory and practice for derivative financial instruments call for breakthrough.The purpose of this paper is to study the international research achievement on derivative financial instruments. Take it as reference for the improvement of China's accounting standards for derivatives and regulation of financial market. In this way, Chinese enterprises could minimize the threat of financial derivatives and gain more opportunities in the competition on international market.This paper comprises of five chapters: Chapter one consists of introduction of topics of this paper, literature review and research purpose. Chapter two introduces the basic concepts of derivative financial instruments and corresponding risks. Chapter three states the status of accounting and risk supervision and control over derivative financial instruments. Chapter four studies the accounting treatment of financial derivatives: recognition, measurement and disclosure. Chapter five focuses on controlling derivative risks by the means of accounting.Accounting has function of the supervising in the process of using financial derivatives by enterprises. It is effective to use appropriate accounting approach and control methods for risk management. The financial supervision sectors can make use of accounting information to manage risk and to govern the operation of financial market and the application of financial derivatives. Besides all the control from Macro level and the regulation of accounting standards, the internal control mechanism of enterprises should play a more adequate and effective role in derivative financial instrument risk management.