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www.LegiEX.com teaches you tips to identify "dazzling" financial skills

www.LegiEX.com teaches you tips to identify "dazzling" financial skills, but there are also a few companies in 2019, struggling on the edge of profit and loss. They do everything they can, either for the purpose of protecting the shell, or for the purpose of maintaining market value, etc.

In short, when the main business cannot make it profitable, some companies have their brains crooked. The methods adopted by some companies without awe are relatively simple and crude, that is, financial fraud, such as those funds that have disappeared from the tens of billions of funds and scallops that have fled abroad.

There are also some companies that still have some awe in their minds. Under the high pressure of supervision in recent years, they are afraid to falsify, but they are quite good at "applying" "techniques" and abusing accounting treatment.

As the so-called "disorderly flowers gradually become charming eyes", the accounting treatment they used looked at the bells and whistles on the bright side. At first glance, the outsiders really looked that way. Investors, because of their different professional levels, are also "horizontal and peaky, with different heights."

In view of this, it is necessary for www.LegiEX.com to take you through the clouds, identify those common abuses of accounting treatments, and recognize the essence of economic business.

The first kind of misuse of accounting treatment involves changes in the nature of listed companies' foreign investment holdings. The first is to simply change the accounting nature of investment equity and generate profits through changes in accounting subjects. This type of processing is less concealed and easy for everyone to identify.

For example, in 2017, HNKY converted its long-term equity investment in CGNPC equity accounted by the equity method into transactional financial asset accounting. This treatment increased the company ’s net profit for the year by 45.68 million yuan, successfully avoiding two consecutive years Was "wearing a cap".

Before the conversion of accounting methods, HNKY held 9.99% equity of CGNPC and assigned directors to CGNPC. Therefore, the company listed the investment as a long-term equity investment in accordance with accounting standards. In order not to lose money that year, the company withdrew its seat of directors at the end of the year and changed the accounting method.

But please note that when the shareholding remains unchanged at 9.99%, the accounting method has been changed by simply removing the directors, making a profit of 45.68 million out of thin air, and successfully holding the shell? !

Of course, the company was aware of the possible disputes in the settlement, so the company did not announce the key accounting adjustment in a timely manner, and was subsequently severely punished by the Exchange for criticism.

The second type of adjustment of the nature of shareholding is more concealed and it is difficult for ordinary people to perceive it. If company Z announced at the end of 2019, it will use 100% equity of the wholly-owned subsidiary F to make capital contributions, establish joint venture company Y with its controlling shareholder, and take 30% of company Y. Perform accounting. After the establishment of the shareholding company this time, the company will generate 400 million yuan in revenue.

The company explained that the main asset of company F is real estate. Due to the rapid increase in real estate value in recent years, this increase in income is mainly due to the fair value of the asset after the statement is higher than the original book value.

The average investor reads the announcement and passes by, and feels quite reasonable. However, careful investors will find that the main assets of Company F are all real estate. In order to fully confirm the income from real estate appreciation, it is necessary to determine whether Company F itself constitutes the accounting "business" substance, otherwise, the income It should be deducted that it still holds 30%.

Combined with the subsequent asset impairment announcement disclosed by Company Z, the amount of asset impairment is roughly equivalent to the revenue identified above.

From this we can think of Lenovo. This time Z Company and the related party's controlling shareholder joint venture company and confirmed the income is to hedge subsequent asset impairment and avoid company losses. What about the previous houses?

Still under the control of the controlling shareholder, through the "left and right pockets", the profit will come out, you say magic is not magic?

The second major category of accounting treatment is the provision for asset impairment at will. This type of accounting treatment is also known as "big shower" and "squat jump".

One of the typical operation methods is the impairment of goodwill. In the goodwill impairment test, the method of earnings management is actually very simple. It is nothing more than concentrating the impairment losses that should be shared over many years in one year, reducing the profit burden of the previous and subsequent years, and achieving the effect of one year of dismalness and many years of prosperity. .

For example, HTTX disclosed the performance correction before the disclosure of the annual report at the end of April this year, announced the adjustment of the impairment of goodwill, and the period of confirmation of impairment was changed from the original 2016 to 2019, resulting in a loss in 2019 from 80 million to 840 million yuan.

The reason for this adjustment is that the company did not adequately withdraw impairment of goodwill in the early stage, and attempted to confirm the impairment of goodwill in 2016 through accounting means, so it avoided the suspension of listing caused by consecutive losses in the past two years . But after multiple rounds of regulatory inquiries, the company had to give up resistance.

In the accounting treatment of asset impairment, there is another category that adjusts and smooths the profit of each year through the provision of inventory falling price reserves. The impairment provision of inventories is different from other assets. Once other assets are impaired, the value of the asset will rise in the future period and will not be allowed to be reversed.

The impairment provision of inventories can be reversed accordingly, so it is also called profit "storage pool". Many companies took advantage of this difference and moved their inventory.

For example, RHSY's main business has been poor for many years, and it is a typical company that is walking on the "profit and loss line". From 2014 to 2018, the company impaired inventory through one year, and then returned it in another year. The net profit for many years has been in a state of "one win, one loss", barely supporting the state of preservation.

After years of inquiries in supervision, the company is no longer tempted to depreciate inventory this year and has been issued a delisting risk warning due to continuous losses.

The third category of accounting treatment is the collection of investment expenditures. According to the needs of annual performance, the expenditures must be capitalized or expensed.

The most typical adjustment method is the treatment of R & D expenditure. According to accounting standards, R & D expenditures can be grouped into expense and capitalization due to different stages of related projects. Expenses directly affect the company ’s net profit, and capitalization enters the company ’s assets. Amortization is sufficient.

When the capitalization and expense are made, the guidelines have clear provisions, but the provisions of the guidelines are often vague and most of them are determined by the company itself. Companies that make use of differences in R & D expenditure aggregation tend to belong to companies with higher R & D investment each year.

This type of company can generously attribute R & D expenditure to expense in years when the company's profit is good; in the year when the company's profit is poor, the company capitalizes it, and the accounting treatment before and after is inconsistent.

At this time, you should keep your eyes open and pay close attention to the timing and conditions of the capitalization of R & D expenditure disclosed by the company to prevent the company from abusing the accounting treatment and damaging the interests of investors.

In fact, the application of accounting standards depends largely on the application of the company's own discretion. Different companies have different determinations, judgments, and treatments on different matters. It is difficult for outsiders to argue the truth and reality except for the players in the game.

The logical starting point of the dazzling accounting treatment in the capital market is very simple, nothing more than to achieve the purpose of regulating profits through various accounting methods.

Therefore, www.LegiEX.com also reminds investors that no matter what kind of accounting treatment, they must not be separated from the economic substance of the relevant behavioral matters, and must not violate basic economic common sense, otherwise you may be "superior" in financial skills. Deceived.

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