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Our analysis of accounting information distortion Liability

Chinese papers Union editing. Abstract: This paper compares three of the history of accounting and two Certified Public Accountants on Accounting Information liability provisions of the legal liability of accounting information distortion changes in process and analysis of this change in the basis of the reasonableness of on the further improvement of the legal liability of accounting information distortion means that the existing legal resources and increase the integration of the new law component is to improve the legal liability of accounting information distortion in an effective way. First, the legal responsibility of accounting information distortion changes in the liability of our country are mainly three types: administrative responsibility, civil liability and criminal liability, the corresponding law has three levels: the first layer for the criminal, civil and administrative penalties General Law, Accounting Law, the second layer, such as Certified Public Accountants, and the third layer includes penalties for violation of Certified Public Accountants and temporary measure, ethical and corporate employee incentive regulations and so on. The second layer of law is the responsibility of accounting information based primarily on the main liability of the layer is not required to make the first layer can be based on appropriate penalties, the third layer has more detailed provisions should take this subject. Due to limited space, this article does not cite all the laws, and changes to the legal liability study focused on the second level. (A) In order to understand the main responsibility of accounting information distortion changes in liability, we have compared the three main responsibility of accounting method provisions of liability (see Table 1), found that major changes are the following: 1. Overall, the 1985 and 1993, not much different accounting method, but in 1999 a larger change in accounting method. 1985,1993 years of accounting liability section in the number of words and content are similar, the 1999 Treaty of 1500 Accounting Law, 8 characters, and 1985,1993 only 5 years of accounting Treaty of 500 words, content, content is the 3 times, other types of legal liability and responsibilities of the main changes are obvious. 2. The Responsible Change: experience from the accounting officer in 1985, unit leaders and leaders of higher level units to 1993 units of the leaders of the accounting staff and the leaders of the main unit and then to 1999, accounting staff, supplemented by the changes. Market economy requires a modern enterprise system, the most important one is separated from enterprise management. 80 20th century, under the planned economy Zhengqigeyi, all aspects of business are subject to the regulation of the supervisor units, unit leaders deserve a higher level of administrative responsibility accounting information. Therefore, the Accounting Law 1985 Article 28 provides that , be given administrative sanctions. 90 years of the 20th century, a market economy, enterprises and authorities have decoupled into independent, self-operating entity, the main responsibility of accounting law accordingly deleted the higher unit leaders. 1999 further in accounting method of accounting personnel and units to draw the leaders of primary and secondary liability, which is the result of several years of accounting practice, people gradually understand the accounting of the actual status and role. In economic or in the administration, as grass-roots workers, accounting personnel are attached to the unit leaders, unit leaders, asked the accounting staff of the accounting oversight of the accounting fraud bear a larger responsibility, is clearly unreasonable. So this change is realistic. 3. Changes in liabilities: 1985,1993 years of accounting provisions of the law exactly the same responsibilities in 1999, the responsibility of the accounting law is still only type of administrative responsibility and criminal liability, but more details. Clear legal responsibility should be the specific circumstances, such as Article 42 punishment shall be increased by 10 cases, 44 and 45 have a detailed accounting fraud limit, 46 of the unit leaders to retaliate against the accounting personnel behavior also has more detailed instructions. Detailed the administrative responsibilities. 1985 and 1993, accounting for only a general reference to administrative sanctions and criminal liability, but no breakdown. Accounting Act of 1999 detailing the types of legal liability, including: within a time limit, fines, suspension of qualifications, revoke the business license and criminal responsibility, alternative types of penalties increased. Accounting Law of 1999 also stipulates that the responsible individuals can be fined 2,000 to 20,000 yuan fine can be imposed on the responsible units of 3,000 to 50,000 yuan fine. This change both for law enforcement, accounting information is also conducive to divide and rule. Three methods do not provide for civil liability of accounting, accounting personnel and unit leaders assume civil liability. (B) Day through the Similarly, we have the legal responsibility of these three provisions of laws and regulations were compared (Table 2). 1. The whole of the three regulations on the responsibility and liability provisions of the main much the same, but the difference on the level of detail. Certified Public Accountants Ordinance, 1986,[link widoczny dla zalogowanych], no separate legal liability related to the contents of two 150 words; Certified Public Accountants in 1993 and dedicated legal liability part of Chapter VI, a total of 4 600 words; 1998 penalties for violation of Certified Public Accountants provisional Treaty of 3000 means a total of 40 characters. 2. Throughout the main responsibility of accountants and accounting firms are registered, no change. Accounting Law no responsibility for the units as the main body, the accounting firm Certified Public Accountants as a responsible subject, we believe that the practice of Certified Public Accountants is more reasonable. Copy the credibility of the mechanism of modern society, the primary means of modern organizations, including accounting firms. A person's life is limited but the organizational life can be unlimited, if the individual interests of the organization depends on the value of the value of organization and depends on its credibility (ie, moral), then the person will pay attention to credibility. We found that certified public accountants and accounting firms have the same relationship to participate in CPA accounting firm to obtain the corresponding occupational status, the CPA's unethical behavior, and indirect damage to the reputation of Certified Public Accountants CPA harm the interests of each of the same the punishment of Certified Public Accountants CPA can also deter the behavior. This mechanism is similar to 3. Liability will not change much. CPA liability changes are mainly reflected in the fine, from there (in 1986, .) The liability of accounting firms is mainly reflected in changes in liability, from without (1986, approach I think that this change is reflected on the accounting agencies and personnel because of their illegal acts caused the loss to investors whether and how liability is liable to change on the understanding of such issues, CPA Act defines the civil liability of accounting firms, but does not provide for civil liability for certified public accountants, and the Supreme Court Act No. 56 of 1996 letter, and the 2002 A similar situation also exists in the United States, registered accountants and accounting firms were originally liable, but with the However, the U.S. accounting profession, according to recent reports have delineated the trend of limited liability. Second, the legal liability of accounting information distortion validity of any act is the result of cost-benefit trade-offs, the accounting information distortion behavior of the main responsibilities is no exception. The author believes that the effectiveness of legal liability is the responsibility of the main legal and regulatory costs and benefits and the costs and benefits relative to the results of the game, the main responsibility for the effective description of the legal regulatory acts of the invalid, the same effective legal and regulatory responsibilities also shows that the behavior of the void. This gives us the responsibility of accounting information distortion analysis of the effectiveness of the main legal responsibility provides an effective way to analyze the behavior of the effective contrast of duty liability is not valid, but also from direct analysis of the market's reaction to the effective and legal liability no. (A) micro-analysis: the main responsibility for acts of Accounting Information rational analysis of rational economic man is the core concept of modern Western economics, so that both the rational economic man Can neither is a purely economic one, and can not be purely moral, but rational economic man living in the meantime. The Gary. Becker (GrayBecker) and Stigler (G. Stigler) that both economic and non-economic sphere, dereliction of duty (including accounting information distortion) of the parties are seeking to maximize their own utility or benefit, and be able to gain cost of economic man. In other words, the main responsibility for acts of accounting information after the fact cost-benefit comparison of rational behavior, not the type of momentary dizzy fanatics. 1. Responsibility for the main acts of accounting information will bring them revenue. U.S. accounting experts Zeff in the That is, accounting information can have different economic consequences, you can change the accounting information to change the existing pattern of distribution of interests, which is bound to induce the responsibility of the main opportunistic enough motivation for accounting information. To induce the responsible behavior of the main distortion of accounting information in a lot of motivation, of 7 Li Shuang think: money motivation, to ensure the job motivation, motivation loans, tax motivation, motivation to shirk responsibility, to conceal illegal motives, political motives. I thought it was 7 and can be classified into two types of motives: pure personal motives, such as bonus motivation, to ensure the job motivation; unit motive but personal ride, such as tax motivated. No matter which type of motivation, have the main responsibility will bring two benefits: (1) economic gains. The head of a unit, this earnings performance for the unit leader for the true extent of changes in accounting information to obtain additional revenue, such as bonuses, stock appreciation income, or the vested interests thus prevent the reduction of flexibility in this part of the proceeds correspondingly great. Unit leaders are closely linked with the interests of the unit, the unit leader level by changing the quality of accounting information is in fact the interests of the maintenance unit in the maintenance of their own interests. The so-called water can capsize the boat, pay packages can reduce the moral hazard and adverse selection, but also make the interests of unit leaders, dare to take risks too attached units. U.S. economist Sai Sila. Booker noted that the United States since the 20th century, 90 large surge in the salaries of corporate managers, the average annual salary rose 866 percent over the same period the wages of ordinary workers rose only 63%, which makes managers worry too much about the loss of their own vested interests, and to take such behavior of accounting information, including many of the moral hazard. Data shows that the United States since the accounting crisis has been the CEO of the average salary of $ 3,000,000 in 2000 decreased to $ 1,800,000 last year, despite the distortion of accounting information will be completely attributed to the responsibility of management remuneration is biased too high, but How to determine a reasonable remuneration is in reducing moral hazard, adverse selection and prevent the trade-off between accounting information is a question worth thinking about. For the CPA, this economic benefit performance for the audit fees and corporate accounting policies in the process of acquisition of an additional fee. 180 American scholars CPA firms replace empirical studies have shown that after replacement of Certified Public Accountants is the only significant difference is that revenue, SEC also believes that replacement of Certified Public Accountants is the praise in order to obtain more favorable treatment. In this process, the company and the certified public accountant in private transactions between the inevitable. Enterprises to pay for additional CPA collusion and favorable accounting policies, the 20th century, 80's U.S. audit ESM Government Securities Co., Ltd. is such a typical case of fraud. (2) political gain. National Accounting Institute, developed educational materials integrity of the investigation group that the main reason for false accounting reports is government intervention (about 54.55%). One of China since ancient times, officials and businessmen say, in the planned economy, government intervention in economic activity everywhere, self-financing principle of market economy requires companies operate independently, but under the influence of traditional concepts, there are still countless officials and business relations, emerging market government action. Even more frightening is that there are internal political component. Weiying that state-owned enterprises also have a power struggle, and is the result of property rights arrangements. Property right arrangements to bring one of the malady, is to enterprises from an economic organization into a political organization, which will induce internal staff time and energy is not used for production but for the power struggle. Described above, both inside and outside the enterprise, our company and its leaders are in the political environment in its pursuit of political gain is obviously the goal. Of course, China is working to change this situation, such as the establishment of a market economy, improve the legal system, rule by law, the conversion functions of the government to abolish state-owned enterprise managers and other administrative establishment, but will be difficult to eradicate this phenomenon. United States, too, from the president to run for election as Members are inseparable from the company's political contributions, Enron investigation with the government officials directly. 2. Responsibility for the main acts of accounting information will also have costs. This is mainly accounting information behavior was investigated after various types of losses, including the management of the penalty cost, the market cost of the penalty cost and default penalties. But can be grouped into two categories: tangible costs, including fines, administrative sanctions, criminal penalties to bring the main responsibility for the loss, mainly due to provisions of the relevant system constraints. This part of the cost is fixed. Second, the intangible costs of its wrongdoing was exposed to the reputation of the indirect effects, mainly by the moral standards of the decision. In general, the higher the moral standards of society, the main responsibility of moral hazard the greater the loss incurred, the intangible cost of greater flexibility. Theory, as long as the economic benefits greater than costs, the main responsibility for the implementation of accounting information is likely to act. First, since the existence of stock options and secret operations, the economic benefits of accounting information are very flexible; Secondly, the cost base is rigid. There are two reasons, first of all tangible cost is very low, such as the maximum fine on the main responsibility are as follows: 20 million criminal law, company law 10 million, 30 million securities law, accounting, law 5 million, while the actual penalty would also like to low, even without injury fur administrative sanctions. Moreover China is still no formal civil liability, despite the Supreme Court's treatment suggestions, but overall is still low; followed by little or no intangible costs. This is because of our credit system has yet to be established. 2001, China has more than 110 accounting firms and certified public accountants by more than 120 administrative penalty, more than 100 CPA firms and more than 600 by the deadline for correction, reprimand, mandatory training and other treatment, this set of data we can clearly see that the main responsibility of punishment is too light on. Clearly, the behavior of the benefits of accounting information distortion can easily exceed the cost, the main responsibility for acts of accounting information more effectively, and poor legal and regulatory effectiveness. (B) of the macro-analysis: Effectiveness of legal and regulatory legal regulation is a form of securities regulation, is also the economic behavior of government action and, therefore, cost-benefit comparison of rational behavior after . The cost of legal supervision of the preparation of the legal system is mainly organizational costs, operating costs and subsequent costs, while its revenue was mainly reduced after the implementation of legal and regulatory law and the law itself is a negative loss of social benefits. Since the legal validity of analysis is too macro-regulation, we can only post from the legal and regulatory analysis of market reaction indirectly. First, if the effective legal regulation and law enforcement related to illegal behavior should be after the fall, on the contrary that legal and regulatory inefficiency. According to Hu Yiming of China from 1996 to 2001, the illegal nature of the listed companies accounting information distortion penalty statistics show that both the absolute amount of the illegal (respectively 1,10,22,26,52,104 home) or its share in the punishment of listed companies ratio (0.19,1.34,2.59,2.74,4.78,9.01 cent respectively) are up in, which shows that our current legal regulation not effective. Further distortion of accounting information in China of punishment. Shaanxi Provincial Audit Society Task Force (2000) Statistics of the 22 cases in China has great influence on the accounting information distortion case, the results show: Punishment time lagged, 80.91 percent of the penalty within 3 years after the accounting information to the market and investors loss has been irreparable; other punishment is too light to be punished for the internal management personnel, for example, types of penalties is only a warning, fines and Shichangjinru three categories, only 2.11% Shichangjinru heavier, lighter fine accounted for 46.15% (and a fine of only 34,400 yuan per capita, lower than the accounting provisions of 5 million), while the lightest warning about 51.74%. Third, the main responsibility of accounting information distortion liability improve First of all, to integrate the existing legal resources and improve the relationship between the relevant laws. Current accounting information associated with the law rather chaotic, with different identification of the same matter have different interpretations of the law, such as the responsibility of the main penalty provisions: Penal Code 2 to 20 million, the Company Law of 1 to 10 million, Securities Law 3 to 30 million and accounting for the 0.3 to 5 million, related laws and will inevitably cause confusion among law enforcement long, which is not conducive to the regulatory accounting information. Second, the increase in new legal component. First, we must increase the penalties. Posner made famous scholar, the effectiveness of supervision by legal means from two aspects: the probability of severe and that, in general, acts of distortion of accounting information is not enough supervision of the legal means severe. The newly adopted United States, or 15 million won in fines, the French commercial company law penalties for the crime of false report is 2 years imprisonment and a fine of 30,000 francs, compared to the punishment of the responsible body to nothing of the; two to civil compensation responsibility to write laws, our over-reliance on legal norms of administrative punishment or criminal punishment, inadequate attention to the civil means. Criminal and administrative responsibility mainly of the penalty, but mainly compensated civil liability and, more importantly, the civil liability may be of interest to form a mechanism to encourage the majority of investors to participate in monitoring both the transfer of the government's regulatory costs and increased investment who consciously participate in the monitoring of the initiative. Reflects the different legal responsibility of the different legal intent of the behavior of accounting information will also have different deterrent effect, the vacancy so that civil liability of accounting information distortion greatly reduce the cost of illegal body, is not conducive to the governance of accounting information distortion. This situation must change.