Ifrs in China

Topics: Financial statements, International Financial Reporting Standards, Balance sheet Pages: 8 (2817 words) Published: August 15, 2010
China has more than 5000 years of history, and was a mysterious country to most occidental people. Because of the influence of the culture and history, China use to be closed to foreign countries until 1979. Chinese people have their own accounting rules that are totally different from occidental countries’ accounting rules. With the development of China’s economy and the implementation of the reform and opening policy, Chinese economic system became from planning economy to free- market economy, more and more occidental countries focus on China -a fast developing country. More and more international cooperation and trade appeared. In order to get the best investment, to know well Chinese accounting system becomes more and more important for foreign companies. History

According to historical report, the word “accounting” first appeared in 1100 B.C. in China. The duty for an accountant at that time was quite simple, nothing more than to calculate costs, revenue, and income daily, monthly and annually. After the founding of the new People’s Republic of China, with the influence of Soviet model, China created their own accounting system that followed the Soviet model to adopt their national circumstances at that time. But since the implementation of the reform and opening policy, China’s circumstances changed quite much, the accounting rules that created before cannot meet the needs of developing economy. So accounting reform came out to the government’s mind. (Jiashu Ge, Feng Liu, New Chinese Accounting Theory Studies for Past 50 Years Review. 1999) Development

The first accounting reform began from 1980’s to 1990’s. In this decade, some foreign companies and joint-venture companies were set up; the main issue of accounting at this time was the conflict of different accounting model. After the reform, the joint-venture company accounting standards came out, and the accounting service market came out. The second accounting reform happened through 1990’s and 2000’s. This decade was the most important period for Chinese accounting system to be complete. During this period, the capital market was founded, Chinese economic system became from planning economy to free- market economy. Under this environment, the Chinese accounting standards reformed comprehensively. The new accounting system which was fit for the free-market economy model implemented. This reform set the base of the advanced reform. The third reform is a deeply reform last from 2000 to now. During this period, China jointed into the WTO and the foreign investment has been increased to a new level. To meet the requirement of WTO and to adjust the capital market, this accounting reform is necessary. . (Jiashu Ge, Feng Liu, New Chinese Accounting Theory Studies for Past 50 Years Review. 1999) Present Profession

The accounting standard that is implemented in China now was issued in December 2000, by Ministry of Finance of China. This standard combined all industries together to create a new set of standard that can fit all the areas of organizations in China. The new standard includes the normal rules of evaluating assets, liability, equity etc; the accounting subjects and implementation, the component and authorization of financial report etc. It cannot be denied that the Chinese accounting system is going to be more and more international, since China has to adapt the increasing global cooperation. (Jiashe Ge. Facing the New Century-Focusing On the Trend of Chinese Accounting. 1999) Future Profession

Recent years, accounting internationalization has attracted more and more attention all over the world, especially after China jointed into the WTO. Since China has to integrate with the world in every area. Accounting as a universal business language in global trading should be international completely. Although, after decades of development and reform, Chinese accounting system has became...

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Jiashu Ge, Feng Liu
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