The Experience of China s Accounting Standards Setting and Its Convergence With IFRSs

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1 The Experience of China s Accounting Standards Setting and Its Convergence With IFRSs Liu Yuting Director-General of Accounting Regulatory Department, Ministry of Finance, PRC Feb 8, 2010

2 Outline Development of China s Accounting Standards and Its Convergence with IFRSs Implementation of China s Accounting Standards Equivalence of China s Accounting Standards and Roadmap for Continuing and Full Convergence with IFRSs

3 I. Development of China s s Accounting Standards and Its Convergence with IFRSs (I) Clear convergence objective Rapid economic development and globalization call for convergence of accounting standards Set clear convergence objective of establishing Chinese Accounting Standards for Business Enterprises which converges with the IFRSs

4 I. Development of China s s Accounting Standards and Its Convergence with IFRSs (II) Proceed with all-round plan The Chinese Accounting Standards System is composed of Basic Standard, 38 specific standards and Application Guidance The development of accounting standards requires a technical team and a well-planned setting process

5 I. Development of China s s Accounting Standards and Its Convergence with IFRSs (III) Technical support and inputs from a wide outreach provide solid basis China Accounting Standards Committee has over 20 members Over 160 consultants from MOF, CSRC, SASAC, CBRC, CIRC, National Audit Office, State Administration of Taxation, the accounting academics, accounting firms and enterprises

6 I. Development of China s s Accounting Standards and Its Convergence with IFRSs (IV) Conduct field tests to ensure effective implementation Conduct field tests at selected listed enterprises and large-scale enterprises

7 I. Development of China s s Accounting Standards and Its Convergence with IFRSs (V) The Chinese standards gained international recognition and converged with IFRSs Joint Statement between CASC and IASB The IASB identified a number of accounting issues for which China, because of its unique circumstances and environment, could be particularly helpful to the IASB in finding high quality solutions for IFRSs

8 II. Implementation of China s s Accounting Standards (I) Organize large-scale training, and make thorough preparation Time: starting from July 2006 Bases: three national accounting institutes Target groups: listed enterprises, accounting firms with qualifications to audit listed companies, finance departments at all levels, relevant supervisory bodies, and the accounting academics, etc.

9 II. Implementation of China s s Accounting Standards (II) Track the disclosed financial reports and take relevant supervision Continuous tracking and monitoring on listed enterprises Establish an experts group to resolve practical problems confronted in implementing the new standards

10 II. Implementation of China s s Accounting Standards (III) Cooperate among government agencies to maintain coordinated regulation Ministry of Finance cooperates with CSRC, CBRC and CIRC in setting up interactive mechanism, achieving supervision synergy, and enhancing supervision The Ministry of Finance has 35 Offices of the Commissioners, and ensures governmental supervision of the accounting profession

11 II. Implementation of China s s Accounting Standards (IV) Expand the implementation scope step by step In 2007, the accounting standards were implemented in 1570 listed enterprises smoothly and effectively In 2008, the application was expanded to all non-listed state-owned enterprises, non-listed commercial banks, securities companies, funds, and non-listed insurance enterprises In 2009, the coverage was further extended Till now, all listed companies, financial institutions and state-owned enterprises implement the new standards In 2010, almost all the large-sized and medium-sized enterprises will implement the accounting standards

12 III. Equivalence of China s s Accounting Standards and Roadmap for Continuing and Full Convergence (I) Promote the win-win equivalence negotiation among relevant jurisdictions On December 6, 2007, MOF and Hong Kong Institute of Certified Public Accountants signed the Joint Declaration on the converged Chinese Accounting Standards for Business Enterprises and Hong Kong Financial Reporting Standards On December 12, 2008, EU recognized the equivalence between China s accounting standards and EU s IFRS. Since the beginning of 2009, Chinese enterprises listed on the European market are allowed to prepare financial statements according to Chinese accounting standards without adjustment as to IFRS

13 III. Equivalence of China s s Accounting Standards and Roadmap for Continuing and Full Convergence (II) Strengthen communication and cooperation Successfully held the Symposium on International Convergence of Accounting in Emerging Markets and Transition Economies Regular meetings among national accounting standards setters from China, Japan and Korea MOU has been signed with FASB, aiming at equivalence of accounting standards between China and the US Initiated the Asian-Oceanian Standards Setters Group (AOSSG)

14 III. Equivalence of China s s Accounting Standards and Roadmap for Continuing and Full Convergence (III) Join the international community in finding solutions for the accounting issues arise in the financial crisis Fair Value Measurement Financial Instruments Financial Statement Presentation

15 III. Equivalence of China s s Accounting Standards and Roadmap for Continuing and Full Convergence (IV) Issue the Roadmap to achieve continuing and full convergence with IFRSs Roadmap for Continuing and Full Convergence of the Chinese Accounting Standards for Business Enterprises with the International Financial Reporting Standards (Exposure Draft)

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