Accounting in China
Overview by Globlatrade.net:
- Accounting Standards
- The accountancy standards for companies promulgated by the Ministry of Finances (MOF) of 30 November 1992 and which came into effect on July 1, 1993. China promulgated its first complete standards specific to accountancy in 1997 and the MOF promulgated 13 standards more specific to accountancy since then. For more information, consult
- Accounting Regulation Bodies
Ministry of Finance (in chinese)
CASC, Chinese committee of accounting standards
CICPA, Chinese institute of chartered accountants
- Accounting Law
- Initially promulgated in 1985, the accounting law of December 1993 was updated in 1999. It includes the legal standards governing accountancy and forms the base for the formulation of administrative rules and regulations for accounting.
- Difference Between National and International Standards (IAS/IFRS)
- There is a gap between national and international accounting standards IAS/IFRS. China does not follow international accounting practices and directives, although the reforms are being done in this direction. Indeed, accounting standards similar to IFRS are currentlently mandatory for publicly held companies listed in China and foreign-invested banks). Otherwise, several accounting regulations are similar to the international practice, however there are differences.
- Accounting News
China Accounting News (EIN)
- Tax Year
- The financial year begins on January 1st and finishes on December 31st of the same year.
- Accounting Reports
- Audit report normally contains a paragraph of definition of the 'task' or `scope' and a paragraph of opinion. The paragraph of opinion aims at establishing if the accounts were prepared according to the appropriate rules and regulations. All the reservations in opinion must be elaborated above. Statements of financial accounts or reports should comprise a Balance Sheet, profit and loss accounts, a report of gross margin of self-financing, notes on the accounts and an account for appropriation of profits and losses. For more information consult the website of the China Accounting Standards Committee operating under the Ministry of Finance.
- Publication Requirements
- Annual publication.
- A fundamental conceptual difference exists between the West and China for auditors. In the West, the auditors are supposed to report to the shareholders, the results and possible mistakes of the company at the general body meeting. In China, the auditors are responsible to work for the management and purely help them in legal formalities.
- Professional Accountancy Bodies
CICPA, Website of the Chinese institute of chartered accountants (in English)
- Member of the International Federation of Accountants (IFAC)
- Member of Other Federation of Accountants
- Member of the Confederation of Asian and Pacific Accountants (CAPA) which represents national accountancy organisation in the Asia-Pacific region.
- Audit Bodies
- Companies have to seek a statutory auditor to conduct an annual audit of the financial health of their organization. You can contact the
National Audit Office of China (CNAO).
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