China gets new accounting standards

cctv.com 02-16-2006 08:42

China has released a new set of accounting and auditing standards, more than three years in the making. All listed companies will have to apply the standards starting next year. In line with international practices, the new standards should help improve China's market economy system.

The new accounting rules consists of one basic standard, 38 specific standards and related application guidelines. It emphasizes the new practice of providing decision-useful accounting information to investors and the public. Starting January the first 2007, all listed companies are required to apply the standards. It will then later be applied to other companies. Also released on Wednesday was an auditing standards system for certified accountants. And it will also come into force next year.

Lou Jiwei, Chinese Vice Minister of Finance said: "The new standards are in line with international practices, but not simply a copy of them. They are based on China's current situation. There are differences, but these differences are acknowledged by the International Accounting Standards Board."

The new Chinese standards incorporate principles familiar worldwide. It encourages investor confidence in China's financial reporting and capital market. It also gives additional spur in investment from both domestic and foreign sources of capital.

Since the new accounting rules will bring obvious changes to the current system, industry experts are expecting some dramatic changes in company financial reports, especially the profit data. They are urging businesses to take the final year to prepare for next year's implementation of the new standards.

Editor:Wang Ping  Source:CCTV.com