Research On The Consolidation Scope Of Enterprise Financial Statement

In 2014 the Ministry of Finance issued a revised CAS No.33 enterprise accounting standards-consolidation financial statements,The revised consolidation financial statements standard actually expands the consolidated scope,introduces the concept of the subject,improves the definition of the control,and emphasizes the three key elements of it,expound the essence of the control concept.And eventually it promotes the development of the substantive connotation of control in a new stage.But in 2015,the regulatory report of the public company issued by the CSRC pointed out that using the "control" principle to make a decision whether bringing the investment units into the scope of consolidation statements is a controversial issue in practice.These include: the judgment of the structured entity into the scope of the consolidation statement,the determination of the scope of the consolidation statement involving the entrustment or the trustee operation pattern.During the two years of using the revised accounting principle practice,the author found that the majority of accountants still have considerable divergences in essence concept of control and the scope of consolidation,there is a big gap between the definition of the existing control and three elements and the original standard such as stockholder’s equity,vote,majority decision making right and personnel of the board of director,formulate financial or management policy.The risk and reward factors mentioned in the definition and control of special purpose entities are not clear enough.They still believe that risk or reward is the essence of decision control or other wrong ideas.Based on the consolidation scope analysis of the International Accounting Standards,the China Accounting Standards and the American Accounting Standards,They have gained greater recognition for the basis of control.And They all agree that control is the foundation of the consolidation,and the logical path of the evolution for it’s key factors are summed up: from the initial majority to over half of the voting right,the majority of the board of directors’ decision making right and arrangements under the substantive control,and then to the current single Control Power Model.In order to comb out the connotation of the three elements of control and the essential links between the key elements of the early stage,The article combs the three elements of control and deepen the logical understanding of the current unified definition of control.In this dissertation,paragraph four the essence of control power is extended and expanded under the principal-agent relationship combining the four weighed elements mentioned by Standard.Through expanded the connotation and extension of control,this paper aims to better resolve and standardize the differences existing in the practice of the consolidation scope under the existing agency relationship,better to correct the vague or false ideas existed by some of the accountants and improved application practices after the new guidelines.Summarized the main contents of this article,The core point is the power nature of control and the application and guidance of the control right under the principal-agent relationship.The main problems in the study of power control: Power derives from rights,But giving investors the right to the investee does not necessarily lead to investors’ power to the investees.We need to acquire important evidence about the voting rights,the personnel appointment and appointment and dismissal of key management personnel,the related relationship between the key managers and the investees depended on the investors,and form a cognitive connection with the three essential elements of controlling power.The greater the exposure or rights and risk returns,the stronger the incentive for investors to gain power.The risk that the investor takes is not itself determining whether the investor has power over the investee.Therefore,the judgment of transition from right to power is very important,and it is also the core contents of control judgment.Finally,this dissertation also gives the advises and research conclusions of the control judgment under the principal-agent relationship.Power is the core element of control,and it is also the inevitable result of controlling the evolution of the substance.The judgment of the principal-agent relationship based on the model of power control should be guided by the principal-agent theory and substance over form principle.And we should estimate overall assessments of the relevant weight factors,pay attention to the various forms of the substantive deprivation right and the influence of the contract and relevant legal provisions on the role of the agent.