China's New Accounting Standards A Brief Guide

China has revised and issued new accounting standards, bringing the country's financial reporting system for listed companies in line with international practices. What steps must listed companies take to prepare for implementation of the new standards?

By Alden Leung and Caroline Yang, Ernst & Young

China's Ministry of Finance (MOF) issued a series of new and revised Accounting Standards for Business Enterprises (New Accounting Standards) on February 15 2006. The New Accounting Standards include the revised Accounting Standard for Business Enterprises-Basic Standard (Basic Standard), 22 newly-promulgated accounting standards and 16 revised accounting standards ("38 specific accounting standards"). It marks the establishment of a new system of Chinese accounting standards, which is appropriate for the development of China's market economy and convergence with international practices. The Basic Standard will be effective from January 1 2007 for all enterprises. The 38 specific accounting standards will be effective from January 1 2007 for listed companies. Other companies are also encouraged to adopt them.