Research On Issues Of The Accounting Of Derivative Financial Instrument And Risk

Derivative financial instrument has become an indispensable important component of modern security market. It is not only a huge risk source but also an important instrument of avoiding risk. The research on the accounting treatment of derivative financial instrument has become an essential topic to accounting and finance researchers. The related regulations on the recognition, measurement and disclosure of derivative financial instrument in China's new accounting standards, together with the different situation of derivative financial instrument compared with before, has made it more and more urgent to conduct research on the accounting of derivative financial instrument.The paper studied the characteristics of derivative financial instrument from macro view point, the regulation differences existed between home and abroad in accounting recognition, measurement and disclosure of derivative financial instrument, and mainly comparatively analyzed the corresponding sections in IAS and FASB, integrated newly issued four standards related with the accounting treatment on derivative financial instrument in Feb. 2006, proposed some problems existed in derivative financial instrument accounting within Chinese finance market, and further analyzed the accounting risk confronted while treating accounting information. Countermeasures have been proposed to cope with such kind of accounting risk, which include to establish independent accounting standards for derivative financial instrument, to perfect internal control system and risk warning mechanism, to give play to the functions of business internal audit and control, to strengthen the action of outer monitoring, etc.Derivative financial instrument has a brilliant development prospect in China. The perfecting on derivative financial instrument accounting is also a very important issue. The discussions on derivative financial instrument accounting and its risk will provide corresponding suggestions on how to healthily and reasonably employ derivative financial instrument for business, and will also provide fundamental research for future studies on related issues.