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单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,Chapter 5,Accounting and Financial Management,Background Introduction,Standard-setters create accounting standards that mandate how financial reporting should be conducted so that the information available to relevent stakeholders can be reliable and consistently comparable.These standards can be divided into two basic categories:rules-based and principle-based.Under the former,detailed rules must be followed when preparing financial statements.Many accountants favor rules-based standards,because in the absence of rules they could be brought to court if their judgments of the financial statements were incorrect.When there are strict rules to follow,the possibility of lawsuits is diminished.,Background Introduction,However,the US GAAP went under a great deal of criticism in the wake of Enron and Worldcom scandals.A major concern arising from these business scandals was that GAAP had become“rules-based,filled with specific details in an attempt to address as many potential contingencies as possible.This made standards longer and more complex,and led to arbitrary criteria for accounting treatments that allow companies to structure transactions to circumvent unfavorable reporting.In addition,the quest for bright-line accounting rules shifted the goal of professional judgment from consideration of the best accounting treatment to concern for parsing the letter of the rules.,Some experts argued that rules-based accounting standards encourages a check-the-box mentality to financial reporting that eliminates judgments from the application of the reporting.To address these concerns,the Sarbanes-Oxley Act of 2002 required the SEC to examine the feasibility of a principles-based accounting system,which represents a call for the convergence of US accounting practices and corporate governance with their international counterparts.,Background Introduction,The present text highlights the recent development in the US accounting landscape and exams the benefits and potential problems as well as the outlook for convergence.,Background IntroductionEnron scandal,Enron Corporation was once one of the worlds largest electricity and natural gas traders.Enron filed for bankruptcy protection in late 2001 amid allegations of accounting fraud and violations of federal securities laws.,The Enron scandal has had far-reaching political and financial implications.As a consequence of the scandal,new regulations and legislation were enacted to expand the reliability of financial reporting for public companies.,Background IntroductionWorldCom scandal,In June 2002,Securities and Exchange Commission(SEC)lawyers filed civil fraud charges against WorldCom for what would later be estimated at over$9 billion worth of accounting errors.While the suit wasnt filed until June 2002,it is apparent that some in the public were aware of illegal practices at WorldCom over a year earlier.A previous lawsuit was filed in June 2001 by several WorldCom shareholders,only to be thrown out.That suit included testimony from a dozen former WorldCom employees,detailing the same problems that would eventually bring about the companys downfall.Financial executives at WorldCom exercised various methods of hiding expenses for a period of more than two years between 2000 and 2002.They delayed reporting some expenses and misrepresented others to give investors the appearance of growth during secretly hard times.,Warm-up questions,What do you know about GAAP and IFRS?What are the main differences between them?,What are the strengths and weaknesses of GAAP and IFRS respectively and what are the pros and cons of adopting the global standards?,Words and expressions,thicket(para.1),n.,1 a dense growth of bushes,小树丛，灌木丛,2,something resembling a thicket in density or impenetrability,一大群，一堆,错综复杂的事物,一大堆问题,a thicket of problems,一群记者围在他家门口,A thicket of reporters gathered in front of his house,tally(para.1)n.a record of the number or amount of sth especially one that you can keep adding to,纪录，累计统计,keep a daily tally of road accidents,scythe(para.1)n.a tool with a long handle and a slightly curved blade,used for cutting long grass and corn,长柄大镰刀,convergence(para.2),n.the process by which different ideas,policies etc.become more similar,趋同,不同做法的趋同,the convergence of different pratices,mandate(para.3),n.an official order given to sb to perform a particular task,指令，命令,vt to make mandatory;,order;require,命令，要求,公立学校的强制解除种族隔离,mandated desegregation of public schools,scrap(para.3)v.to cancel or get rid of sth no longer practical or useful,discard,报废，废弃,scrap your old computer,I think we should scrap nuclear and chemical weapons.,reconcile(para.5),v.to make(two apparently conflicting things)compatible or consistent with each other,调和，使兼容,/,对接,to reestablish a close relationship,和解,调和这些对立的观点是有可能的,It is possible to reconcile these apparently opposing perspectives.,Getting Hamas and Fatah to reconcile is also key to the success of U.S.-backed Mideast pea
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