On The Window Dressing Of Financial Statements

Financial report gloss of enterprise is a disgusting international issue which has a long history. There are many cases of cooking accounts today in China. According to a statistical data, 37cases of financial report gloss has been investigated by the committee of stock supervise since 1990. Auditing Ministry checked 32 audit reports from 16 accountants'offices in 2001, 23 reports from 14 offices were very unfounded, forging 7.14 billions. The gloss does great harm not only to investers and debtors but also to the government. Some scholars has already investigated this case. With my professor Miss Wang's help, I attempt to find the way how to restrain the gloss by analysing its motive,category,measure and revealing its distinguishing methods.There are 4 parts in my paper:The motive of the gloss is discussed in the first part. The gloss of financial report emerges on the three bases: firstly,there are different interests between the possessors and managers of enterprises; secondly,the unsymmetry of information has given chance; thirdly,bad external supervise makes the gloss reality. In the second part, the gloss's category and measures are mainly discussed. The motive of gloss decides the categories. Financial report gloss is divided by two kinds:whitewashing managing achievement and whitewashing financial states.There are many whitewashing techniques ,such as fabricating trades,choosing accounting mathods or policies inproperly,and so on.Distinguishing methods are argued in the third part.Four methods help to find the gloss:the method of removing bad assets,the method of removing related trades,the method of removing unusual profits,the method of analysing cash flows.In the fourth part,how to restrain the report gloss is discussed. Establishing a system on the basis of the gloss's reasons helps to restrain it.The main measures:firstly,setting up a encouraging system in the long term can relate managers' interests with the enterprise's development closely;secondly, carry out honesty education and form healthy tendencies in the society;thirdly,perfect administer structure of company and establish internal effective restricting system;fourthly,strength making laws and institutions;fifthly,enhance external surpervise and increase the cost of the report gloss.Finally,I thank sincerely to my professor Miss Wang and the authors of the books I have read for my paper.