Simulation of the preparation and reporting of financial information and audit

1, proposing: stock market need to simulate preparation and reporting of financial information
securities market to establish more than a decade, in line with the reform and state securities regulators conducted a lot of useful exploration. Prior to 1998, the securities regulatory authorities to allow the state-owned enterprises or state-holding enterprises in the restructuring as a limited company can apply when the stock issuing and listing, and its first three years of continuous performance. However, due to the special nature of state-owned enterprises, mostly state-owned or state-controlled enterprise is not an overall restructuring and listing, but transformed into stock companies, it is necessary for non-operating or non-associated operating assets stripped, otherwise, the company is often difficult to to achieve the conditions for issuing shares.
In order to achieve market conditions, these simulations reported financial information is prepared as a stock company would require another three years of issuing and listing period (hereinafter referred to as 'reporting period') an integral pArt of the report, after CPA audit as pArt of the prospectus. As the shares of the company three years ago does not exist in the accounting entity does not exist but also for their preparation and reporting of financial information, how to prepare to become a stock market listing of the company's ability to release one of the key issues. Unfortunately, until now, regulators have not worked out the preparation and reporting of relevant guidance and auditing standards, leading to the first issue of shares in the company's securities market, the financial information the disclosure of the preparation and the lack of norms, lack of comparability of financial information. Stock market in recent years there is a 'false market' issues such as more or less relevant.
To tie in with state-owned or state-controlled business to profitability, since 1997, the securities regulatory authorities to allow listed companies to issue secondary shares (hereinafter referred to as 'additional'). The problem is that in the pilot of the six textile enterprises, some of the financial statements of listed companies is a loss, but the company has also succeeded in additional, and this seems to 'Company Law' under the condition of the company issuing shares is the company a profit for three consecutive years the provisions of sub. However, these companies before the secondary offering, mostly carried out large-scale reorganization of assets, the SFC is actually acquiesced after the reorganization of listed companies under the framework of simulation preparation and reporting of financial information, and to simulate the accounting statements for the assessment after the baseline. A large proportion of listed companies after the reorganization of assets, how to compile the financial information reported, regulators did not formulate relevant guidelines, the result is when the first batch of six companies announced additional accounting ledgers that there is a big difference in the standard. Due to lack of preparation and reporting standards, regulatory authorities of individuals, listed companies and intermediary agencies are quite different views. This has led, for carried out large-scale asset restructuring of the company, when the secondary offering of the preparation and disclosure of financial information than non-standardized, investors will not be able historical information from the past to determine the company's future financial situation.
In addition, large-scale mergers and acquisitions of listed companies, how the preparation and disclosure of financial information is also the absence of relevant provisions. Some companies absorb the merger took place, does not simulate the preparation of financial statements, absorb the merger took place in a different year, different companies of their financial information disclosure is not the same. This indicates that the listed company when the merger took place, how the preparation and disclosure of financial information to reflect the extent of the matter, and thus provide useful information to investors, regulators still lack of preparation and reporting guidelines.
However, first issued in the absence of financial information to prepare an audit guide and the corresponding norms of cases, more than 1,000 companies through restructuring into shareholding companies and issuing shares, and most of simulation preparation and reporting of the reporting period, the first two years of financial statements. A major proportion of the assets of a company restructuring or mergers and acquisitions, but also prepare an analog of financial information, and as a secondary offering materials. Can be seen, in exceptional circumstances, the company's restructuring of listing and is inseparable from the simulation of additional preparation and reporting of financial information. This paper combines and simulation preparation and reporting of financial information-related issues, talk about my personal knowledge, while the SFC published the 'IPO spin-off companies to furnish financial statements to adjust guidance' (draft) to make some comments.
2, analog meaning of financial information
What is the analogue of financial information, the document did not give a precise definition. In accordance with the U.S. Securities and Futures Commission (hereinafter referred to as 'SEC') to say, simulation of financial information is relative to the historical financial information for the purposes of. U.S. SEC, in its Regulation SX Article 11 mentioned in the simulation of financial information (pro forma financial information), is order to provide investors with information on the impact of certain transactions that these transactions took place earlier on the historical financial statements of impact. Simulation of the preparation and reporting of financial information in general can not rely solely on historical financial statements to meet the needs of investors, when the decision-making. SEC to simulate the preparation of financial information and reports drawn up detailed guidelines.
We believe that the simulation of financial information can be defined: Suppose a company's current structure already exists in the report with no change in the beginning, according to the reporting period, the actual existence of the constituent entities of the company, according to the company that the implementation of accounting policies to report on the preparation and reporting period for each year of the financial information. This definition could be interpreted as: