财务会计理论(司可脱)文件01_scott_im_ch01

1、FINANCIAL ACCOUNTING THEORYPurpose: To create an awareness of the financial reporting environment in a market economy1Chapter 1Introduction2Some Historical PerspectivePaciolo, 1494English Corporations ActsCompulsory auditDevelopments in the United StatesCorporate income tax, 1909SEC, 1934The search

2、for accounting principles3Organization of the Book4Information AsymmetryTwo Main TypesAdverse selectionPersons with an information advantage exploit this advantageInsider tradingMoral hazardManager knows his/her actions in managing firm but shareholders do notManager shirking5User Decision ProblemIn

3、 Presence of Adverse SelectionRational investment decisionIn Presence of Moral HazardMotivate and evaluate manager performance6Role of Financial ReportingTo Control Adverse SelectionDecision usefulnessFull and timely disclosureTo Control Moral HazardNet income as a managerial performance measureSens

4、itive and precise net income7The Fundamental Problem Of Financial Accounting TheoryThe best measure of net income to control adverse selection not the same as the best measure to motivate manager performanceThis implies that investor and manager interests conflictStandard setting viewed as mediating

5、 the conflicting interests of investors and managers in financial reporting8ENRON CORP.Implications for Accountants9Enron, Contd.Special Purpose Entities Associated with EnronOn Enron BooksDr Note Receivable$1.1 (billion) Cr. Capital Stock$1.1 Capital stock issued to Special Purpose Entity (SPE) (a

6、limited partnership) SPE owned by Enron officers10Enron, Contd.GAAP requires amounts due from shareholders be deducted from shareholders equity Is a limited partnership, owned by Enron officers, a shareholder?11ENRON, Contd.Off-Balance Sheet FinancingOn SPE books: Cashxxx DebtxxxSPE borrows money, u

7、sing Enron stock as security. Note payable to EnronxxxCashxxxCash is paid to Enron to reduce its note receivable from SPEEnron has the cash but debt does not appear on its books12ENRON, Contd.Enron Renders Services to the SPEA/C receivable $628 (millions) Net income $628 Services rendered to SPE 199

8、7-2000 incl.If Ltd. partnership had been consolidated, revenue only recognized when earned outside the consolidated entity.13ENRON, ContdEnron records its share of SPE profitsInvestment in SPExxxNet incomexxxSPE profits include increases in fair value of its holdings of Enron shares.Result: Enron in

9、cludes increases in the market value of its shares in its net income.14ENRON, ContdIn 3rd quarter, 2001, Enron Recognized that the SPE should be Consolidated:Dr Shareholders equity$1.1 Cr Notes receivable$1.1 To deduct loan to SPE from shareholders equity Also, restate previous 4 years earnings to r

10、educe by $628 millions 15ENRON, ContdImpacts of the WriteoffsNo effect on operating cash flowDebt/equity ratio, debt covenants affectedLoss of investor confidenceShare price falls from $90 to 66bankruptcy protection 2 Dec/01SEC, Dept of Justice, Congressional InvestigationsWhere were the auditors? The Board?16ENRON, Concl.Points to Think AboutCrucial ro