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The Impact of Changing from Chinese Gaap to Ifrs

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The Impact of Changing from Chinese Gaap to Ifrs

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The impact of changing from Chinese GAAP to IFRS

Name: Si Chen

H00121138

Module:

Coursework Assessment

Abstract

In the 21st century, economic globalization has become an investible trend. With the rapid growth of economic globalization and the growth of international capital markets, international accounting convergence has become an irreversibly realistic issue for countries worldwide. Thus, international accounting convergence has become the focus of the theoretical and practical issues. At the same time, the development has surged in China. Due to the fact that China adopted IFRS as references in standard-setting, making an objective assessment of the accounting convergence effect if important to the development of accounting theory and practice. This essay analyses the process of Chinese accounting standard and the possible factors influencing the international convergence effect in China.

Key words: GAAP China impact IFRS

1. Introduction

In the late 1980s, the philosophy of the Chinese economy underwent a revolutionay shift as the system changed from a socialist-planned economy to a socialist-market economy(Graham & Li, 1997). This economic reform was designed to modernize China and integrate it more fully with the international market(Hilmy, 1999; Winkle, Huss, & Zhu, 1994). After the government organized stock exchanges in Shanghai and Shenzhen in 1991, the firms issuing A-share are required to obey Chinese GAAP. Meanwhile, the international accounting standards (IFRS) in the world had rapidly promoted, and increasingly close to make it become one of the world's primary standard which most countries are applying. The essay analyses the ‘Chinese GAAP and IFRS: an analysis of the convergence process’ which is written by Songlan Peng and...