Comparison of United States, United Kingdom, and Chinese Accounting Systems, Accounting Standards, Accounting Practices
This report discusses the accounting practices of the following countries U.K, U.S.A and China. An analysis of these different accounting systems will be conducted on issues such as the growth and background, social, economic and fiscal pressures that have led to each nations current characteristics. Concluding on the direction each nations accounting systems and practices seem to be heading towards.
Introduction The main characteristics of U.K accounting is that it is highly dominated by organised accounting profession, which only relate to limited liability companies, no other such entity. A separate fiscal accounting has been developed entirely from commercial accounting. Public sector in the U.K follows its own different rules in accounting.
U.K was one of the initial and first countries in the world to develop and have Companies acts containing provisions and also one of the first professional accounting bodies was established in the U.K. Professional accountants and company law play a key role in dominating the U.K corporate financial reporting and play a significant influence varying from external and domestic factors. Britain's financial market is structured around a "capital financial market based financial system" where the stock market funds large scale businesses, trading securities and pricing role. The stock exchange and taxation system have very little influence in financial reporting. Having said that, the stock market has involvement in developing financial reporting standards for listed companies. Although U.K seems to have developed its own companies act and regulations, it still has received indirect foreign influence from member states of the European union through EU directives and from U.S.A with their new accounting standards.
Financial reporting and accounting in the U.S.A seems to have a large and dominant influence on accounting in the world today with its largely consistent standards promulgated by the international accounting standards committee. However, the U.S.A accounting is very similar to U.K accounting due to the fact that us accounting was initially an export from the U.K, which is often known to be the funding fathers of US accounting. For example many of the largest accounting firms in the US such as Ernst & Young and ICPMG were expatriate Britain.
The U.S.A has taken that initial guidance and is becoming the accounting sector leaders in their accounting standards by exploring and developing rapidly in the accounting field. Standards have become largely voluminous and detailed due to the litigious-ness of American society and intense rivalry among accounting firms for business.
China on the other hand compared to U.K and U.S.A has seen large-scale impacts of influence of political and economic change on its rules and practices. Although it is one of the few communist regimes to still be intact, it is significantly the largest. The main communist party in the country has developed a "socialist market economy" which has resulted in a huge rapid economic growth.
Recently there have been many western countries that are becoming interested in Chinese accounting both in academic and practical aspects. Chinese accounting over the last decade has seen proliferation of accounting regulations replacing existing uniform accounting systems therefore bringing Chinese accounting in line with internationally accepted practices. This view can be backed up with china in joining the ISCA in 1997in an attempt to make her accounting standards consistent with the IAS.
The most up to date development and recent one in china is the development of her own accounting standards, which include the MOF (Chinese Ministry of Finance) that has revised the existing five accounting standards operated. The MOF has encouraged other enterprises to adopt the new system at an early...
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