Development of accounting regulations in China

To cope with the rapid growth of the country's economy and to facilitate a better understanding of the financial statements of a PRC enterprise, the PRC government has made significant changes and revisions to its accounting regulations. The Ministry of Finance (MOF) has recently promulgated new or revised accounting regulations. Chapter 3.3 includes a list of the regulations in use.

The Accounting Systems for Business Enterprises (ASBE), known to have been prepared after studying the accounting standards, guidelines and practices issued by the International Federation of Accountants (IFAC), International Accounting Standards Board (IASB) and other accounting bodies, are more in line with the IAS, and are similar to each other, although there are small differences regarding disclosure requirements and some accounting issues. In addition to the ASBE, the MOF prepared a set of new specific accounting standards (and exposure drafts) which were to be released into standards beginning in 1997 and which bring the accounting principles and regulations in the PRC further in line with IAS. So far only 16 of these exposure drafts have been formalized and made effective. They are shown in Table 3.5.1.

Table 3.5.1:

Specific Accounting Standard	Applicable	Effective Date
Related party relationship and related party transactions disclosure	Listed companies only	1 January 1997
Cash flow statements (revised)	All types of enterprises	18 January 2001
Post balance sheet events	Listed companies only	1 January 1998
Debt restructuring (revised)	All types of enterprises	18 January 2001
Construction contracts	Listed companies only	1 January 1999
Investments (revised) [1]	Listed companies only	18 January 2001
Changes in accounting policy, estimates or fundamental errors (revised)	All types of enterprises	18 January 2001
Revenue	Listed companies only	1 January 1999
Non- monetary transactions (revised)	All types of enterprises	18 January 2001
Contingencies	All types of enterprises	1 July 2000
Intangible assets	Joint stock limited companies	1 January 2001
Borrowing costs	All types of enterprises	1 January 2001
Leases	All types of enterprises	1 January 2001
Interim reporting	Listed companies only	1 January 2002
Fixed assets [1]	Joint stock limited companies	1 January 2002
Inventories [1]	Joint stock limited companies	1 January 2002
[1] These standards are mandatory to listed companies and/or joint stock limited companies. All other types of companies, however, are encouraged to adopt.