Analysis On Accounting Regulation Of The Application Of Fair Value In China

As the economic environment changing rapidly, people require higher quality of accounting information. historical cost is clearly unable to meet the information needs of stakeholders, whereas fair value, which can better adapt to the changing market environment and have higher correlation, win more and more popular.1950s, Committee on Accounting Procedure of America introduced the concept of fair value in their study announcement, China also accelerated the study of the fair value in the1990s and introduced the concept of fair value in accounting standards in the late1990s. With the continuous application of fair value, accounting regulation of the application of fair value emerge. In the application process, people gradually realize that fair value also have its fatal weaknesses, such as poor reliability and strong subjectivity, so it is necessary to strengthen the regulation of the application of fair value to take full advantage of the fair value. Accounting regulation of the application of fair value refers to supervise and manage the application of fair value by establishing and improving relevant laws and regulations, applying advanced supervisory technology, in order to ensure the proper application of the fair value in the capital market, thus protect the vital interests of all stakeholders and to achieve stable development of the market economy.The application of fair value is not always opportune. The outbreak of the U.S. financial crisis makes most market participants believe that the fair value should to be blamed, but through research, the SEC found that the root cause of the financial crisis is not the application of fair value, but the lack of effective regulation of the application of fair value. Therefore, in the context of crisis, we should strengthen the accounting regulation of the application of fair value. However, due to the lack of a complete conceptual framework for fair value, regulators cannot master the recognition, measurement and disclosure of fair value skillfully, coupled with that regulators’ comprehensive quality is not high, regulatory issues appear frequently; and the level of our economic market is not high, the range of the applications of fair value is restricted, market parameters needed in the estimation of fair value are not available, all these make the regulatory work more difficult. This article use the normative study methods, first sort out the problems in our accounting regulation of the application of fair value, analyze the causes of the problems profoundly, then combine with some relevant experience in America, at last put forward some specific regulatory measures. I hope the article may be helpful to the regulatory work in China. The article is divided into five parts. The first part is introduction, it describes the research background and significance, relevant literature reviews, research methods and basic frame, etc. The second part introduces the implications of fair value and accounting regulation firstly, then leads to the meaning and characteristics of the accounting regulation of the application of fair value, and describes its theoretical bases as well. The third part by introducing the application of fair value in our accounting standards and enterprises, and by introducing the current status of accounting regulation of the application of fair value in China, points out the following regulatory problems: the lack of regulatory bases, the range of the regulation of fair value accounting is fuzzy, the regulatory cost of the application of the fair value is high, the regulatory work faces high risk and so on; Then after a profound analysis, the main reasons for the existence of these regulatory issues may be the followings:the environment of the application of fair value is not yet mature, relevant regulations and standards are incomplete, corporate governance structure is irrational, the estimated nature of fair value, the low-level technical of the regulatory work, etc. The fourth part absorb some regulatory experience of the U.S. by learning the SEC and FASB how to regulate the application of the fair value:improve the market mechanism of the application of fair value, accelerate the formulation of guidelines, strengthen the cooperation between departments in order to improve regulatory efficiency, disclose more fair value accounting information. The fifth part, in connection with the problems and reasons mentioned above, and on the basis of the regulatory experience in the U.S., I propose some measures to improve the regulation of the application of fair value in China:firstly, improve relevant regulations and standards; secondly, strengthen the construction of corporate governance structure; thirdly, enhance the regulatory techniques; fourthly, strengthen the regulation of some auxiliary regulatory agencies.