1. The meaning and characteristics of derivative financial instruments
International Accounting Standards Committee (IASC) ) International Accounting Standard No. 39 "Financial Instruments: Recognition and Measurement" (IAS-NO.39) promulgated in 1999 defines derivative financial instruments as follows based on Standard No. 32: Derivative financial instruments refer to those with the following characteristics Financial instruments:
①The value changes with changes in specific interest rates, security prices, commodity prices, foreign exchange interest rates, exchange rate indexes, credit ratings and credit indexes or similar variables Changes;
②The initial net investment required is smaller relative to other types of contracts with similar reflections of market conditions;
③Settled at a future date. According to the trading methods and characteristics of derivative financial instruments, they can be divided into four categories: forward contracts, financial futures, financial options, and swaps. Engaging in the business of buying and selling derivative financial instruments will make the entity directly or indirectly own related assets or liabilities. This is a kind of "financial asset" and "financial liability" that have different characteristics from assets and liabilities in the traditional sense. In general, derivative financial instruments have the following characteristics:
1. Leverage.
Leverage in financial theory refers to the operation method that can obtain more investment with less capital cost, thereby increasing returns. Derivative financial instruments are based on the price of the underlying instrument. It is not necessary to pay off the entire value of the relevant assets during the transaction. Instead, the relevant assets can be managed and operated as long as a certain proportion of deposit or margin is deposited. Therefore, traders can take advantage of the price differences in different markets to make profits by buying from low-priced markets and selling from high-priced markets. Although the international financial market tends to be globally integrated and there is little price difference between markets, arbitrage and speculators still make considerable profits due to the huge trading volume of derivative financial instruments. The emergence of speculators has not only enlivened the derivative financial market, but alsodisrupted international financial markets to a certain extent.
2. Strong value volatility.
In the traditional sense, the value of assets is determined by the amount of labor necessary for society, and they are relatively stable. The price fluctuates around the value, and the amplitude is not very large. Financial assets in derivative financial instrument transactions are completely different, with strong value volatility. When a certain derivative financial instrument can significantly reduce the risk of an underlying instrument, its value will increase accordingly; conversely, if a certain derivative financial instrument can no longer reduce the risk or bring any profit, it has no value. Furthermore, when it cannot bring any profit but may lead to huge losses, its value is a corresponding "negative number", which is something that assets and liabilities in the traditional sense do not have.
3. Extremely high risk.
The direct reason for the generation of derivative financial instruments is the enterprise's requirement to "avoid risks", and risks and derivative financial instruments are inseparable. Derivative financial instruments, properly operated, can minimize the risk on the underlying instrument. On the contrary, derivative financial instruments will maximize the risk of the enterprise. The vagaries of the market and excessive speculation by traders have caused many people to make huge profits, and also caused many participants to suffer losses or even go bankrupt. According to the joint report of the Basel Banking Committee, the main risks involved in derivative financial instruments are: market risk, credit risk, liquidity risk, operational risk, settlement risk, and legal risk.
4. Virtuality.
Virtuality refers to the characteristics of securities that are independent of real capital but can bring certain income to security holders. The virtual nature of derivative financial instruments means that most of their transactions do not constitute assets and liabilities of the relevant financial institutions and become off-balance sheet businesses. Since the vast majority of derivative financial instruments are not listed on the balance sheet, especially as derivative financial instrument transactions account for an increasing proportion of the entire financial business, financial institutions seek a large amount of off-balance sheet business to improve their balance sheets. structure, improve the return on assets, thereby strengthening the bank's capital base and expanding profitability.
2. The impact of derivative financial instruments on current financial accounting theory
For several years, the recognition, measurement and reporting of financial instruments have been troubled by the accounting profession. The emergence and rapid development of derivative financial instruments have aggravated the situation, causing traditional financial accounting to face new challenges in its accounting treatment.
1. The influence of basic concepts of financial accounting.
The current financial accounting definitions of basic accounting concepts such as "assets" and "liabilities" are based on the results of past transactions or events, and transactions expected to occur in the future Or the event itself cannot form an asset or liability. One of the characteristics of financial instruments, especially derivative financial instruments, is that the transaction reflected in the contract does not occur now, but will occur in the future. If derivative financial instruments are classified as corporate assets, the traditional concept of "assets" must change. Similarly, if derivative financial instruments are classified as "liabilities", it is only possible to convert contingent liabilities into current liabilities. In other words, such contingent liabilities can never be converted into current liabilities. "Liabilities" in the traditional sense are difficult to To summarize this. "Financial assets" and "financial liabilities" come from contracts signed by both parties, and are essentially different from traditional assets and liabilities. According to the traditional accounting model, signing a contract cannot form corporate assets or liabilities. The emergence of derivative financial instruments has questioned the basic concepts of traditional financial accounting.
2. The influence of accrual basis and realization principle.
The recognition standard of financial accounting is based on the accrual basis and requires that the revenue recognized must be realized. According to the accrual basis, an enterprise does not record the impact of economic business on the enterprise when it receives or pays cash, but records its impact on the enterprise during the period when the economic business occurs. The realization principle means that the business entity has completed the process of obtaining income and has received payment or has the right to collect payment, then the entity can recognize this income. It can be seen that whether it is accrual basis or cash basis, both are based on transactions or events that have occurred in the past, and transactions and events that occur in the future will not be recognized. The occurrence of derivative financial instruments heralds a series of future financial changes, and these future financial changes cannot be reflected in traditional financial reports, making the accounting information provided by financial reports incomplete or even false, making the risks unpredictable.
3. The impact of accounting measurement principles.
Traditional accounting measurement is based on the historical cost principle. However, the historical cost principle only confirms transaction activities and the data issued, and a lot of financial information is not reflected. This will make the asset valuation based on the historical cost accounting measurement model seriously deviate from reality. The scientific nature of traditional accounting theory and accounting information reliability will face severe challenges. Because derivative financial instrument transactions are no longer completed at one point in time like traditional transactions, but must be completed over a period of time and a process, and thisThis process cannot be treated as two transactions separately like traditional transactions (for example, the purchase of fixed assets and the final scrapping of fixed assets in traditional transactions can be treated as two transactions). Any changes in derivative financial instruments during their holding period are inherently connected and indivisible. A certain derivative financial instrument ranges from valuable to low value or even to worthless. There is no independent transaction, but the result is quite objective. If we want to start from reflecting the authenticity of the main economic activities, we should truly reflect the value of the derivative financial instruments held by the enterprise in stages. This will inevitably break the original historical cost principle of financial accounting and replace it with fair value. The emergence of fair value makes the historical cost principle impossible and should no longer be the only measurement attribute of financial accounting. The development trend of financial accounting measurement attributes in the future should be that historical cost and fair value coexist in the long term.
4. The impact of financial reporting.
The goal of financial accounting confirmation, recording, and measurement is to provide reasonable and true financial reports to the outside world. The core of the financial reporting system is accounting statements. The three general accounting statements of balance sheet, income statement and cash flow statement have become the main body of financial reporting. Existing or potential users of information obtain information useful for decision-making through financial reports. Most of the transactions in derivative financial instruments are off-balance sheet businesses, which cannot be reflected in the transactions themselves. People cannot directly understand the financial transactions and risks faced by enterprises from the financial reports, thus making the risks of the financial market and the enterprises themselves become uncertain. More elusive.
3. Accounting treatment of derivative financial instruments
1. Derivatives Confirmation of Financial Instruments.
There are two issues that need to be resolved in the recognition of derivative financial instruments: First, whether the rights or obligations represented by the derivative financial instruments should be included in the balance sheet before the maturity date. Project (asset or liability) recognition; secondly, whether changes in the fair value of derivative financial instruments should be recognized as profit or loss on the financial reporting date. Derivative financial instruments are different from ordinary contracts in that they are irrevocable under certain conditions. Once the contract is signed and takes effect, the creditor-debt relationship is established, and the corresponding transactions that coexist with risks have also been substantially transferred. Moreover, derivative financial instruments are a transaction method that coexists with high returns and high risks. From the conclusion of the contract to During the performance process, the value changes greatly. If it is confirmed when the contract is performed, the accounting information will lack the high-risk and high-income information generated by derivative financial instruments, and the relevance of the entire accounting information will be reduced, which will not satisfy the information users. requirements, and cannot achieve the accounting goal of “decision usefulness”. Therefore, the author believes that under the conditions of derivative financial instruments, the correspondingThe principle of relevance is based on the "substantial transfer of risks and rewards" as the basis for accounting recognition. Recognition begins when the contract is concluded and the risks and rewards are substantially transferred. If the value changes during the holding process, subsequent recognition will be carried out. The entire process of holding and performance is reflected.
2. Measurement of derivative financial instruments.
The measurement of derivative financial instruments is the core and difficulty of accounting for derivative financial instruments. The accounting community has not yet reached a consensus on this issue. The crux of the problem is that derivative financial instruments, as a high-risk hedging tool, have great uncertainties. Regarding this uncertainty, which measurement model should be used for measurement and how to measure it not only affects the recognition of derivative financial instruments, but also affects the information disclosure of derivative financial instruments in accounting statements.
IAS-NO.39 stipulates the initial measurement and subsequent measurement of financial assets and financial liabilities respectively. The regulations on initial measurement are: when financial assets and financial liabilities are initially recognized, the enterprise should measure them at their cost. For financial assets, the cost refers to the fair value of the consideration given up; for financial liabilities, the cost refers to the received price. The fair value of the consideration received. The regulations for subsequent measurement are: after initial recognition, financial assets should be divided into four categories, namely:
① Loans and should be originated by the enterprise but not held for trading Collect money;
② Investment from holding date to maturity date;
③Available Financial assets sold;
④Financial assets held for trading.
Among them, the first and second types of financial assets should be measured at amortized cost using the actual interest rate method after initial recognition; the other two types of financial assets should be measured at amortized cost after initial recognition. Afterwards, it shall be measured at fair value, and transaction costs that may occur during sales or other disposals shall not be deducted. In addition, financial assets designated as hedging items should be subsequently measured in accordance with the relevant hedging accounting regulations; financial assets that are not priced in an active market and whose fair value cannot be reliably measured should be estimated in accordance with the relevant regulations. Fair value and measurement.
For the subsequent measurement of derivative financial instruments, international accounting standards require fair value as its basic measurement attribute. The advantage of fair value is that it can provide more relevant and understandable information than traditional historical cost. The specific valuation method of fair value is the key to the measurement quality of derivative financial instruments. The international financial marketAmong the thousands of derivative financial instruments, only a small part are widely circulated in the market. Most of them are specially designed for a small number of customers, suitable for specific purposes, and do not have widespread circulation. For this part of derivative financial instruments, the present value of future cash flows is the best way to measure fair value. For derivative financial instruments with developed markets, market price provides the best reference for fair value.
3. Disclosure of derivative financial instruments.
Before the 1990s, although derivative financial instruments had been widely used as hedging or speculative tools, they were not recognized as assets or assets of the holding or issuing enterprise. Liabilities are not listed in the accounting statements and are only described in the notes to the accounting statements. The disclosure method of this kind of annotation is usually rough and is not suitable for the characteristics of high returns and high risks of derivative financial instruments. Since the IASC has solved the recognition issue of derivative financial instruments in its latest standards, the financial assets and financial liabilities generated by them should be presented in the statement. The presentation content includes:
①The amount of the contract. The buyer and seller of the contract are recognized as a financial asset and a financial liability respectively.
②The amount of deposit paid and option premium paid are recognized as a financial asset of the enterprise.
③The fair value of the above-mentioned financial assets and financial liabilities on the financial reporting date. The structure of derivative financial instruments is complex, and all information cannot be reflected in the balance sheet, especially the risks faced by derivative financial instruments. Therefore, regulations on the off-balance sheet disclosure content of derivative financial instruments should be strengthened at the same time. The off-balance sheet disclosure content should at least include The following parts:
First, special contract terms and conditions that are not listed in the detailed list, including the purpose, category and nature of derivative financial instrument transactions . This is an important factor affecting the amount, timing and certainty of future cash flows from derivative financial instruments.
Second, the accounting methods and accounting policies adopted for accounting include the time standards for initial recognition and derecognition of derivative financial instruments. This is used as the source for measuring fair value attributes, and the basis and reasons for recognizing and measuring profits and losses caused by derivative financial instruments.
Third, risks related to derivative financial instruments include interest rate risk, exchange rate risk, credit risk, circulation risk, etc.
Fourth, market price prediction information. Derivative financial instruments held on the financial reporting date, should prompt the possible changes in its market value in the future and the impact on the enterprise.
