China's new accounting standards to be adopted
Source: Xinhua Date: 2007-07-17
China's central-level State-Owned Enterprises (SOEs) and large to mid-scale companies will all adopt China's new accounting standards that comply with the International Financial Reporting Standards (IFRS) by the end of 2009.
The country's small and medium-sized enterprises, which make up 99 percent of the total companies in China, will not comply with the IFRS.
Speaking at an international accounting conference in Beijing this week, Liu Yuting, director of the Accounting Department of the Ministry of Finance (MOF), said central-level state-owned enterprises would comply with the new regulations by 2008 and the scope would be expanded to include all large and mid-scale enterprises a year later.
"The MOF will also speed up the construction of an internal control system on accounting to ensure the credibility of accounting information released by the enterprises," said Liu.
China's listed companies adopted the new Chinese accounting standards at the beginning of the year. The standards, including 39 specific principles for corporate accounting, are much closer to international practices.
"There is a clear momentum toward accepting the IFRS as the common financial reporting language throughout the world, and companies from more and more countries including China are benefiting from the trend," said David Tweedie, chairman of the International Accounting Standards Board (IASB).
"The benefits of these accounting reforms for China are clear, "said Tweedie. "The new Chinese standards that incorporate accounting principles familiar to investors worldwide will encourage investor confidence in China's capital market and financial reporting, and will be an additional spur for investment from both domestic and foreign sources of capital."
He added that for Chinese companies that are playing an increasingly global role, the acceptance of the new standards should also reduce the cost of complying with the accounting regimes of different jurisdictions in which they operate.
The Republic of Korea announced its intention to adopt the IFRS in 2009, India will make a decision on the issue some time this month and Japan is also feeling the pressure to reform.
Iraj Talai, regional manager of the financial management of the World Bank, said that China's experiences in accounting reforms would be of great help to other emerging and transitional economies.
