Institutional Factors Influencing China’s Accounting Reforms and Standards

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New accounting standards can be divided into two parts. First level represented fundamental and second stood for the concrete accounting standard. For this time, the profit model of corporations and the operation efficiency of assets were emphasized largely. In addition, a new principle which advocated for paying more attention to prospective potential growth instead of summarizing the histories constantly was added. More importantly, this new system attached great importance to the quality of the assets and the disclosure to the potential risks, while the indication of figures will be lees practical. All the new efforts helped greatly for the perfection of our socialist market economy systems and the transformation of our economy growth pattern.

Phase V (2013-2015) The development of “THE BELT AND ROAD”

With the constant progress of “The Belt and Road” strategy, the trade communication between China and Central Asia has been experiencing a large increase. Culture exchange, financial funding, infrastructure establishment, technical supports and abundant of other events are just happening along the route. Definitely, the cooperation in the field of finance takes a large proportion within this project. And this is largely because the inconsistency of the accounting information among different countries, leading to a high cost for the whole trading operation and this has just made a call for a coordination of the different accounting standards applied in this project.

Regarding this issue, many people have held different perceptions. A large group of people believed that all the countries participated in this project should try hard to convert their accounting standard to IAS gradually, they thought this might be easier for countries to cooperate better and access financial information efficiently .And it was in 2016, some people proposed that the economy situation differs largely among different countries, and countries with poor economy power will become as the disadvantaged group in this case. The alternative on their side was that central Asia would not convert their standards to the IAS while the main principles would remain consistent as IAS. They can adopt different international accounting standards based on the economy activities, and orient on the decisions made by investors. This method can bring more containment, transparency during the whole process and will be more convenient for countries to cooperate with each other.

3.Conformity with International Financial Reporting Standards was specified as an overriding objective in formulating China’s accounting standards. What is the author’s opinion of this objective?

Author’s idea: The author argues that the majority of Chinese enterprises work in an accounting environment differing from the one that is presumed by IAS. He believes that Chinese accounting standard should be designed to serve the characteristics of the local instead of catering for requirement of a small number of firms which are already on the list of overseas stock exchange. Mainly for the lack of professional auditing in China, he proposes that it will be difficult to ensure the credibility of information provided by IAS. Many limits of the convergence and harmonization of the accounting standard also become as his reason for opposing this trend.

4. Reference：

1.Institutional factors influencing China’s accounting Reforms and Standards：

2.The revolution of Chinese accounting standards and its latest developments：

http://202.119.108.161:93/modules/ShowPDF.aspx?GUID=dc54c6d60ff64eab9221c464564710f5

3.The research on the development of Chinese accounting standards with the progress of the “THE BELT AND ROAD”.

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