[Abstract] This paper argues that the role of accounting information systems in corporate governance has yet to be fully recognized. Financial accounting information cannot fully meet the requirements of corporate governance due to the constraints of many factors; and management accounting also needs to reconstruct its objectives and methodology system in order to contribute to corporate governance. Both management accounting and financial accounting serve the company's internal and external affairs, and the difference between the two fundamentally stems from whether information disclosure is mandatory. In order to promote the reform and development of management accounting, attention should be paid to the environmental factors of the accounting system, the combination of innovation and standardization of the management system and the intrinsic nature of accounting information.
[Keywords]Management AccountingAccounting Information SystemCorporate Governance
I. The Role of Accounting Information System in Corporate Governance
Accounting information system is naturally linked to corporate governance, and effective accounting and auditing disclosure is a crucial tool in corporate governance. According to contemporary enterprise theory and stock market theory, the role of perfect accounting information system in the field of corporate governance is mainly manifested in:
Firstly, it helps to inhibit "insider control". The core issue of corporate governance is how to incentivize or constrain managers to maximize shareholder value. A sound accounting information system is conducive to reducing information asymmetry and increasing management transparency, thus achieving the purpose of controlling agency costs and curbing "insider control".
Secondly, it helps to curb management corruption. Although the extent of the role of effective accounting and auditing systems in curbing managerial corruption is related to the mode of corporate governance, this role is irreplaceable by other means of governance.
Thirdly, it helps to improve the incentive mechanism of ceo and executive directors. how the compensation of ceo and executive directors can match the performance of the company in order to achieve the best incentives, is a subject that has received much attention in the corporate system. It is generally believed that short-term incentives for senior managers should be based on accounting surplus, while long-term incentives should be based on market value. Therefore, the measurement of accounting surplus is also one of the core foundations of incentives.
Fourth, it helps the capital market to monitor the company. Although the international since the 80's, people on the capital market to monitor the effectiveness of the company's skepticism, but adequate and effective accounting information to help enhance the effectiveness of this is still *** knowledge. In particular, as the wave of corporate restructuring through capital markets has continued since the 1980s, there has been widespread concern about how to improve the transparency and effectiveness of accounting information in order to reduce the costs of recapitalization.
Fifth, fundamentally, contributes to investor confidence. Because adequate and effective management and information disclosure mechanisms contribute to the formation of a good corporate governance structure, effectively protect the interests of external investors as "principals", thereby enhancing investor confidence.
In the author's view, in addition to these aspects, an effective accounting information system is also directly or indirectly related to the following dimensions of corporate governance:
First, the improvement of the effectiveness of the board of directors and the fulfillment of the responsibility to shareholders. The role of the board of directors is of increasing concern in corporate governance practices. In order to be truly accountable to shareholders and to ensure that corporate objectives are met, board members must be active participants and makers of major decisions in promoting the overall success of the company, and this participation relies heavily on effective accounting information.
Second, the fulfillment of responsibilities to other stakeholders. The goal of the company can not only maximize the interests of shareholders, but also consider the interests of other people with whom it has a long-term interest.Since the 80's, more than half of the states in the United States have made changes to the corporate law, requiring the company manager to serve the company's stakeholders, and not just for the shareholders. Protecting the rights of all stakeholders and maintaining a good relationship between a company and its stakeholders also requires a foundation of reliable and abundant accounting information.
Third, the determination of ceo's performance objectives. Although the ceo's performance objectives depend on the company's determination of the role of the ceo position, different enterprises or the same enterprise in different periods of time, the target value orientation will be different, but no matter what the circumstances, the ceo's performance objectives will always include a series of qualitative and quantitative performance elements, these performance elements often need to be reflected in a certain accounting indexes, and the performance of the realization of performance needs to be disclosed through the accounting information system. The achievement of performance needs to be disclosed through the accounting information system.
Fourth, the board of directors and supervisory board performance assessment. Unlike the ceo's performance assessment, the performance assessment of the board of directors and the supervisory board mainly lies in the assessment of the effectiveness of their own activities, rather than judging the effectiveness of the company's day-to-day business decision-making, and thus this assessment is often not based on the company's operating results and financial position as a starting point. Nonetheless, this type of performance assessment still pays attention to the success or failure of the company's finances, and the assessment procedures and disclosure channels still involve accounting information systems.
Fifth, human capital pricing. Human capital pricing is the basis for determining the compensation of executives, especially top executives. Only on the basis of appropriate pricing of human capital, the various incentives for managers can operate effectively. And human capital pricing is a typical market-oriented behavior, it must also rely on adequate and effective accounting information.
In summary, to achieve the goal of corporate governance, it is necessary to further recognize the role of accounting information system, effectively maintain the authority of accounting and auditing activities, and improve the quality of accounting and auditing information.
II. The Role of Management Accounting in Corporate Governance--Why Financial Accounting Information Cannot Fully Satisfy the Requirements of Corporate Governance
To fully realize the due role of accounting information in corporate governance, it is obviously not enough to rely on the financial accounting system alone. Since the disclosure of financial accounting information is a highly publicized act, it is limited by a series of factors as follows:
First, the scope, quantity and quality of information disclosure must follow certain accounting standards. Financial accounting information is more responsible to the public, and therefore must strictly comply with the requirements of "transparency", emphasizing the normative nature of the information, which is completely mandatory in nature.
Second, the content of the financial accounting report is mainly financial information. Although financial reporting now also emphasizes the need to provide certain non-financial information, but after all, these non-financial information is only of a supplementary nature.
Third, the principle of cost-effectiveness is followed. Although the costs and benefits of information disclosure is often difficult to accurately measure, but this does not prevent the information provider in the disclosure of information to make their own judgment on the costs and benefits associated with it. In addition to the basic information required, only those types of information that are deemed to bring some economic benefit to the enterprise may be disclosed "additionally".
Fourth, the limitations of trade secrets. Any information that involves trade secrets, especially information that may have an adverse effect, will certainly be disclosed with caution.
Fifth, market and cultural context. Market and cultural background, such as the different understanding of information insufficiency and information excess, the different acceptance of "voluntary disclosure", etc., also has a direct relationship to the amount of information disclosure.
It is because of these reasons mentioned above that the amount of information carried by financial reports is limited, and shareholders and other stakeholders are not able to get sufficient information satisfaction from the current financial reports. The results of empirical research also support this judgment. For example, according to Dr. Lian-Sheng Wu's survey, both institutional and individual investors, who consider information on future opportunities and risks, financial forecasts, human resources, and management's analysis of accounting information to be useful, account for more than 60%. All of this information traditionally falls under the purview of management accounting and clearly lacks effective disclosure in current financial reporting. In this way, the provision of information that meets the objectives of corporate governance relies heavily on the management accounting system, and management accounting will play an increasingly important role in improving the corporate governance structure and maintaining its efficient operation. Unfortunately, however, due to the limitations of traditional theories, it is still difficult for existing management accounting systems to assume this responsibility. Therefore, the need to expand the management accounting theory and method system has become very important.
Three, around the needs of corporate governance, expanding the management accounting system - the construction of the objectives and methods of construction
(a) the objectives of the construction
1. Management accounting objectives include two major issues. Accounting objectives actually include the two issues of to whom accounting information is provided (service object) and what is provided (service scope). The current theory of management accounting is flawed in the positioning of these two points.
As far as the service object is concerned, the long-term misunderstanding is that financial accounting and management accounting are distinguished as external service and internal service, which is generally described as "financial accounting mainly meets the needs of external information users, and management accounting mainly meets the internal needs of enterprises". This formulation is very vague in theory and has led to many ambiguities. The most controversial question is whether internal managers do not care about the financial reports provided by financial accountants. It has also been noted that there is now a great deal of interest outside the firm in much of the information that used to be considered to be in the realm of management accounting. Thus, the internal/external approach to accounting information systems has become increasingly at odds with reality. In fact, from the point of view of meeting the ultimate purpose of the enterprise system, there is no essential difference between financial accounting and management accounting, both can and should be for the internal and external services of the company, and all the differences in the form of all the differences in the degree of disclosure of mandatory information. Moreover, the scope and quality of financial accounting information disclosure requirements, and government policy needs also have a direct link, but not set in stone. Therefore, the author believes that the external financial reports and internal management reports, rather than the name of "mandatory information reports" and "non-mandatory information reports" is more appropriate. That is to say, all the statutory requirements must be publicly disclosed information, are "mandatory information reporting" category; no mandatory disclosure requirements but also with the corporate governance and corporate management of other information, belong to the "non-mandatory information reporting" category, by the enterprise to decide to whom to provide, how much to provide and how to provide.
In terms of the scope of services of management accounting, the mainstream view in the West is: first, to provide information for the development of decision-making and planning, and as a member of the management team to participate in the development of decision-making and planning process; second, to assist managers in directing and controlling business activities; third, to motivate managers and other employees to complete the organization's objectives; fourth, to measure and evaluate the performance of the organization's business activities, departments and other employees; fifth, to evaluate the organization's performance. Fourth, measuring and evaluating the performance of business activities, departments, and other employees in the organization; and fifth, evaluating the organization's competitive position and working with other managers to ensure the organization's long-term competitiveness in the industry. Although such a statement has been involved in the field of corporate governance, such as motivating managers to complete the organization's goals, but as a whole, it has not fully reflected the objective needs of corporate governance. In the author's view, management accounting objectives must be clearly stated to serve the dual requirements of corporate governance and corporate management. Serving corporate governance is the fundamental need for management accounting innovation. Borrowing the famous saying "relevance disappears", contemporary management accounting has lost the greatest relevance is not fully concerned about the needs of corporate governance, to serve the main level of corporate management of the traditional concept of management accounting in solving the reality of the information needs has appeared to be extremely unsuitable.
2. The general and specific objectives of management accounting. According to the above analysis, the general objective of the two accounting subsystems can be expressed as follows: financial accounting is to provide sufficient and effective mandatory information for enterprise stakeholders, and management accounting is to provide non-mandatory information for the realization of the multiple purposes of corporate governance and corporate management. The specific objectives of management accounting are centered around its general objective:
First, to provide non-mandatory information to corporate stakeholders. Within this area, there are three areas of particular interest: first, future forecasting information. Compared with the financial accounting report reflecting the past financial position, operating results and cash flow and other conditions of the enterprise, the future forecast information is more relevant for stakeholders to make economic decisions. As for the scope, extent and manner of disclosure of forecast information, the supply and demand of information will reach an "equilibrium point". Second, non-financial information. Non-financial information helps to understand and evaluate the enterprise at a deeper level, and also helps to predict the future of the enterprise. For information users, non-financial information is to some extent more valuable than financial information. Third, social responsibility information. Including the fulfillment of responsibilities to creditors, employees, consumers, suppliers, government, community and the public and other aspects of the need for appropriate disclosure.
Second, to assist and review management decisions. Although this is the traditional function of management accounting, it should be re-conceptualized in terms of the need to reflect the strategic development of the enterprise and the requirement for optimal use of economic resources in long-term operations.
Third, the service of internal control, fast and accurate information transfer and feedback mechanism. The internal control mentioned here includes two levels, one is adapted to the needs of corporate governance, the control of the executive director and ceo; the second is as an important form of corporate management, ceo's control of the company's daily operations.
Fourth, the establishment of incentives and compensation system to provide the basis for performance evaluation and determine the compensation program. Including the evaluation and incentives for the board of directors, supervisory board, general manager, each responsibility center and its various types of employees at different levels.
Fifth, to provide information support for business innovation and organizational system innovation.
The above specific objectives do not distinguish between what serves corporate governance and what serves corporate management, as they are often intertwined in practice. However, the goal that management accounting must serve both corporate governance and corporate management levels is clear.
(II) Methodological construction
The goal construction determines the basic direction of methodological construction, while the quality of methodological construction will constrain the goal construction.
The two main shortcomings of the current system of management accounting methods are: (1) the weakness of the tools directly targeting the level of "corporate governance", which to a certain extent affects the importance of the top management of enterprises to management accounting; (2) the methods are mostly simply piled up each other, lack of systematic integration, and the boundaries with other areas of enterprise management are not clear.
From the point of view of realizing the function of corporate governance, management accounting should create new methods or reform the traditional methods to meet the following requirements: ① the assessment of corporate value (or core competence of the enterprise); ② the compilation of prospective financial information; ③ the control of internal accounting and auditing; ④ the disclosure of information on protection of interests of shareholders and other stakeholders; ⑤ the formulation of the ceo's performance responsibility; ⑥ the performance evaluation and incentive compensation system of each management level; and ⑥ the development of a system to evaluate and compensate for the performance of the ceo. The design of performance evaluation and incentive compensation systems for each management level (including the development of incentive and compensation contracts for top management); and (vii) human capital pricing, among others.
As for the realization of the company's management functions of a variety of management accounting methods (such as forecasting and decision-making, budgeting, cost control, responsibility accounting, etc.), mainly to meet the internal decision-making and control, to achieve the optimal allocation of resources. Such methods (including concepts) should also continue to innovate, especially in management accounting activities to implement the guiding ideology of strategic management.
(C) Re-recognition of the definition of management accounting
Based on the discussion of the objectives and methods of management accounting system, it is necessary to measure the new understanding of the definition of management accounting.
The definition of management accounting by the Committee on Management Accounting (cma) under the American Accounting Association (aaa) is: management accounting is the use of appropriate techniques and concepts to deal with the historical and expected economic data of a subject, to help management formulate a plan with appropriate economic objectives, and to achieve these objectives for the purpose of making rational decisions. The Financial and Management Accounting Committee (FMAC), a permanent branch of the International Federation of Accountants (ifac), defines management accounting as the process of recognizing, measuring, accumulating, analyzing, reporting, interpreting and transmitting information (financial and operational) used by management for planning, evaluation and control within an organization to ensure the use of its resources and to assume responsibility for their management. The starting point of these definitions is to serve the management of the company, which is obviously not fully in line with the current situation and future development trend of management accounting.
In order to reflect the characteristics of corporate governance at the same time, the definition of management accounting can be expressed as follows: management accounting is a branch of corporate accounting information system, which provides a variety of financial and non-financial information beyond the mandatory financial reporting, in order to meet the special information needs of corporate governance and corporate management.
From the discussion of the definition of management accounting, the following thoughts can be drawn:
First, the question of the name "financial reporting". As mentioned above, the information handled by today's accounting systems is practically no longer confined to the financial sphere.
On Improving Corporate Reporting, published by the Special Committee on Financial Reporting of the American Institute of Certified Public Accountants (AICPA) in 1994, outlines five types of information required by the user, namely, financial and non-financial data, management's analysis of the financial and non-financial data, forecasting information, information about shareholders and management, and the company's Background. It is clear that it is no longer possible to encompass all of these under the name "corporate financial reporting". Therefore, I believe that in the future, the more accommodating term "corporate economic report" can be used to replace the term financial report. The enterprise economic report consists of the "core statement" consisting of the balance sheet, income statement, cash flow statement and statement of comprehensive income (which belongs to the category of "mandatory information reporting" and mainly provides basic financial information), and the "peripheral report" consisting of the basic overview of the enterprise, segment report, social responsibility report, human resources report, financial forecasting report, and special management accounting report (which belongs to the category of "optional information reporting" and provides basic financial information). Information Reporting", which provides expanded economic information about the enterprise). This allows for a wide range of corporate reporting objectives to be met and for reports to be made available in a convenient manner. Although the term "corporate financial reporting" is likely to remain in use for quite some time as a matter of custom, its meaning is in fact changing, and will inevitably change even more in the future.
Second, the understanding of financial reporting institutions. Relying on the traditional sense of enterprise finance department obviously can not complete all the needs of today's information disclosure, the current finance department's functions are actually close to a comprehensive information department. A more radical solution is to set up a more functional organization, such as called "information department" (inclusive of the responsibilities of the current accounting department). It is also possible to consider separating the finance department and the general information department according to different functions, and assigning part of the work of providing information to the general information department, but this is not as efficient as having a single department. If the finance department is still being used in the enterprise, it should be made clear that its functions are no longer limited to providing "pure" financial information, and that other functional departments must have clear responsibilities and procedures to complement the finance department's information disclosure work. Otherwise, the "finance department" such a complex function, heavy task organization, and other functions of the enterprise to coordinate the task of information disclosure, will become increasingly difficult.
Third, the understanding of management accounting principles. The introduction of corporate governance as a concept in the management accounting system requires a new understanding of some traditional management accounting principles. There are two main reasons for this: first, management accounting activities can not be understood as in the past, usually can not take into account the accounting standards, otherwise management accounting information can not meet the needs of the corporate governance level; second, the quality of management accounting information at different levels of the requirements are sometimes contradictory, for example, the same is the use of information in management decision-making, the board of directors and ceo on the requirements of the principle of soundness may not be consistent.
Fourth, the understanding of management accounting and financial accounting "integration theory". The relationship between financial accounting and management accounting, there have been "integration theory" and "separation theory" two views. As two subsystems in the accounting information system, the relationship between management accounting and financial accounting was originally very close, theoretically speaking, there is no need for the existence of two different data collection and processing systems in an enterprise at the same time. Maybe many years later, the development of information technology (especially network technology) will make the enterprise as long as the collection and provision of source data, as for the screening, processing and analysis of information can be completely by the information user through the specialized computer software to complete their own operations, by that time there is no longer a need for scholars to painstakingly to distinguish between what is the financial accounting information, which is the management of accounting information. However, at least for the time being, there is no way to realize such an ideal, and the information can only be provided in the form of finished products rather than raw materials. At the same time, as mentioned earlier, due to the limitations of financial reporting, it is not only impossible for financial accounting to accommodate management accounting at present, but it is also necessary to more fully utilize the diversity and flexibility of management accounting in information dissemination. Therefore, the two branches of financial accounting and management accounting in the accounting information system are neither completely separate (e.g., in the collection of raw data), nor yet completely unique (e.g., in information reporting)." Management accounting report" or "non-mandatory information reporting" will remain in a state of independent existence for a long time to come.
Four, to promote the reform and development of management accounting
To complete the expansion and reform of management accounting system, the task is arduous, the theory is far from mature. On the way to promote the development of China's management accounting, this paper will not repeat such as the professionalization of management accounting, the founding of management accounting professional journals, the popularization of management accounting knowledge among business managers and accountants, etc. in the accounting community has formed *** knowledge of the views of the accounting profession, only to elaborate on the following three ideas:
Firstly, attention should be paid to the environmental factors of the management accounting system. Changes in the environment and organization imply changes in the types of information and uses of information applied to decision making. The theory of corporate governance provides a new idea of understanding the object, task and characteristics of management accounting, on the other hand, also because the management accounting system must directly serve the corporate governance, therefore, the characteristics and condition of the corporate governance itself will directly affect the quality and efficiency of the management accounting system. Once the decision-making and management levels are truly separated, and the composition and functions of the board of directors and the supervisory board are improved (e.g., the supervisory powers of outside directors and non-executive directors are strengthened, and the nomination committee, salary committee, investment committee, budget committee, etc., within the board of directors are more complete and functioning), it is inevitable that the role of management accounting will be utilized in a more effective way. In addition, in-depth study of the current socio-economic environment in the positioning of management accounting, not only to create a favorable business environment for the further development of management accounting, but also to make management accounting techniques and methods more adaptable to the requirements of the business environment.
Second, the combination of innovation and standardization of management system. In management activities, innovation and standardization complement each other. Now there are serious deficiencies in both areas, especially the newly created system is often not regulated in a timely manner. For example, the financial controller system has been developing rapidly in recent years, but how to make its operation more effective has not been considered in conjunction with the transformation of traditional accounting systems (including management accounting systems). ① Although the board of directors and supervisory boards have been set up in the restructuring of enterprises, their quality to be able to ensure the effectiveness of the governance structure can not be separated from the board of directors and supervisory board members of the background of financial and accounting knowledge, otherwise they can not take on the responsibility of monitoring the performance of the company. ② Now the effectiveness of the internal audit system of many companies depends on the attitude of the ceo, from the point of view of standardizing the governance structure, the internal audit organization should be more directly responsible to the supervisory board or the board of directors. Larger enterprises, especially listed companies, whether to set up an audit committee; audit committee authority and occupation how to clearly defined, so that it maintains considerable independence; audit committee operation how to cooperate with the management accounting system, in order to reduce the cost of supervision, improve the efficiency of supervision, these need to be explored and practice.
Thirdly, the "quasi-public" nature of accounting information should be fully recognized. Public disclosure of financial accounting information and management accounting information, to a certain extent, have the characteristics of public **** goods. Because of the existence of externalities in information disclosure, Governments can and should play a role. Therefore, not only financial accounting information, but also the standardization of management accounting information should be given equal attention by government agencies. On the other hand, from the point of view of the information market, the quantity and quality of accounting information depends on the demand for information, so the provision of accounting information will fundamentally form a "buyer's market". Nowadays, the providers of accounting information are more or less in a "seller's market" mentality, "what I provide, you have to accept what". However, whether it is financial accounting reports or management accounting reports, any improvement without listening to the views of the majority of information demanders will not be helpful and will cost the people money. Therefore, it is recommended that a specialized agency be set up to regularize the research on the demand for accounting information, and in addition to the continuous improvement of financial accounting reports ("mandatory information reports"), it is also recommended that various guidelines be gradually provided on the collection, processing, and handling of management accounting information, as well as the disclosure of management accounting information that is required to be publicly released ("non-mandatory information reports"), in order to help improve the standardization of the scope of the basic concept of management accounting and the efficiency of the operation of management accounting practices. accounting practices.
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