The Ministry of Finance issued 39 corporate accounting standards (hereinafter referred to as "new standards") on February 25, 2006, including 1 basic standard and 38 specific standards. The new standards are basically in line with international accounting standards. Consistent, achieving international convergence of my country’s accounting standards. However, the new standards may also cause some discomfort during the implementation process.

The urgency of international convergence of my country’s accounting standards

The need for economic globalization

Since the 1990s, the economies of various countries around the world have developed rapidly. International trade and international investment are showing a good development trend. Under this circumstance, the requirement for a unified world business language is becoming more and more urgent. The global convergence of accounting standards as the world's business language is an irresistible historical trend.

The need for global capital market integration

The formation of the global stock market, the global commodity futures market, the exchange of exchange rates and interest rates, and the flow of funds around the world mean that the global capital market Integration.

my country's capital market is hugely attractive to foreign investors, but at the same time, foreign investors are increasingly demanding that my country have a financial accounting system that is consistent with international accounting standards. In addition, for companies that want to be listed overseas, different domestic and international accounting standards are a major obstacle for these companies to enter the international market.

If we cannot effectively solve the transparency problem on which the capital market depends for its survival and development, and cannot solve the problem of listed companies and intermediary agencies truthfully disclosing information to the society, then our country's capital market will have no future.

The need for economic internationalization

Over the past 20 years, my country has implemented opening up to the outside world and has better grasped the opportunities of international industrial restructuring. It has expanded import and export trade and utilized direct foreign investment. Remarkable results have been achieved in investment, which has promoted the rapid growth of the domestic economy for many years. Joining the WTO will further integrate our country's economy into the world economic system.

The international convergence of accounting standards will help foreign investors understand the financial status of domestic listed companies, thereby promoting their investment in domestic listed companies. Especially for QFII and international investors who will enter after the market is more widely opened in the future, the increased transparency and mutual understanding brought about by the convergence of accounting standards can greatly reduce the risk of foreign investors entering and create opportunities for domestic companies to attract foreign investment. convenient. It is a wise choice for the Chinese government to reform the current domestic accounting standards system and establish a new corporate accounting standards system that adapts to the requirements of market economic development and is consistent with international practices.

Looking at the international convergence of my country’s accounting standards from the perspective of the new standards

Fully considering my country’s objective environment and characteristics

Our country is still in a period of economic transition, and we must learn from it International accounting standards should be coordinated with international accounting standards as much as possible, but should also be based on one's own actual situation and not simply copy international accounting standards. The new standards bring our country's standards closer to the internationally recognized quality benchmark of IFRS. The main differences between the two are as follows: when the market economy is not yet fully developed and the government still has considerable influence, the application of "fair value" has been "tailored" to adapt to this situation; correlation The requirements for party disclosure have been adjusted to reflect the country’s background of having many state-owned enterprises; provisions for asset impairment cannot be reversed. In IFRS, if circumstances change, companies can revalue their assets based on circumstances, but our country does not allow this.

Carefully handle the relationship between the new standards and international accounting standards

The new standards adhere to four principles in dealing with the relationship with international accounting standards. That is to say, for exactly the same business, international accounting standards must be implemented; for businesses that are consistent in form but inconsistent in substance, we must strive to coordinate with the international community; for problems that did not occur before but are now emerging, we must be consistent with the international accounting standards; and the last point is that , then special problems require special solutions.

The international convergence of accounting standards is a dynamic process

As new standards and guidance are released one after another, the degree of difference between these standards and IFRS will gradually emerge. In some countries that have adopted IFRS as a basis, standard setters are finding that the rationale for retaining differences from IFRS is increasingly weak. The risk is that much of the much-loved international credibility of financial reporting may end up disappearing, even if differences in standards are thought to have a greater impact than they actually do. In view of the current situation that international financial reporting standards may continue to change in order to converge with US standards, my country's accounting standards should be updated at any time and problems that arise during the implementation of the new standards should be corrected.

In the Basic Accounting Standards and Industry Accounting System promulgated in 1993, our country accepted internationally accepted accounting ideas for the first time and fully used the debit and credit accounting method. At that time, the accounting standards and international accounting standards were still in the same stage. A low correlation stage.

In early 1998, my country promulgated eight specific standards including the "Cash Flow Statement". Judging from the promulgated accounting standards, international accounting thinking has been further implemented in the standards, and the content of the specific standards is further in line with the international accounting standards. At this time, the degree of internationalization of my country's accounting standards has undergone a qualitative leap compared with 1993, reflecting its high correlation with international accounting standards. Except for a few matters, the new accounting standards have achieved convergence with international accounting standards.

Some thoughts on the new standards

Standards that small businesses should follow for accounting information

Listed companies and state-owned enterprises will be implemented from January 1, 2007 New Accounting Standards. Small companies have a single equity capital structure, do not finance the public, and have few users of accounting information. It is obviously unrealistic and unfeasible to require small companies to implement unified accounting standards and disclose information like large companies.

In recent years, the international accounting community has realized the particularity and importance of small business accounting and that the accounting information needs of small businesses are different from the accounting information needs of large enterprises. The 17th meeting of the United Nations Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) provided a discussion draft entitled "Accounting for Small and Medium-sized Enterprises", arguing that international accounting standards are basically aimed at listed companies and large enterprises, and do not consider small businesses. accounting needs and special issues. The meeting proposed the establishment of another set of accounting standards for small businesses. The "Non-Public Accounting Responsible Entities" will be implemented in 2007.

my country's small businesses currently implement the "Small Business Accounting System", and it is obviously unrealistic to implement the new accounting standards in the future. However, both small and large enterprises require roughly the same accounting information, and there are still relatively large differences between the "Small Business Accounting System" and the new accounting standards. Therefore, it is recommended that our country learn from the "Non-Public Accounting Responsible Entities" to simplify the new accounting standards. , develop a suitable set of accounting standards for small businesses.

How does fair value reflect "fairness"

The actual value of assets changes with time, economic environment and other factors. Compared with the static nature of cost valuation, fair value maintains a dynamic value. Reflection, this is a major breakthrough and highlight of the new standards. However, how fair value can achieve "fairness" is a matter of concern. The determination of fair value is difficult. In many cases, it relies on accounting professional judgment and is easily affected by human factors. The recognition of fair value must have corresponding regulations. It cannot be implemented by enterprises simply by "estimating". In addition to the regulations on "commercial substance", "reliable measurement" and other conditions, there should also be an authoritative organization to confirm the fair value. and supervise.

Duplication of definitions in accounting standards for debt restructuring

The new standards define debt restructuring as “when the debtor encounters financial difficulties, the creditor makes an agreement in accordance with the agreement reached with the debtor or the court’s ruling. "If the debt is paid off with cash that is lower than the book value of the debt, the debtor shall recognize the difference between the book value of the debt restructured and the cash paid as reorganization income and recognize it as profit or loss for the current period; When cash assets are used to repay debts, the debtor shall treat the difference between the book value of the restructured debt and the sum of the fair value of the transferred assets and related taxes as reorganization income and recognize it as profit or loss for the current period. ”

New debt restructuring accounting. The standards are basically the same as the "Accounting Standards for Business Enterprises - Debt Restructuring" that was officially announced in June 1998 and was implemented before the 2001 revision. The restructuring income is no longer recorded in the "capital reserve" and is re-recognized as current income. In the two years from 1999 to 2000, many listed companies carried out false restructurings by taking advantage of the provisions in the standards that debt restructuring proceeds be included in current profits and losses. In order to prevent listed companies from using debt restructuring for profit manipulation, the debt restructuring standards were revised in 2001. This iteration of debt restructuring accounting standards may cause listed companies to repeat their old tricks. Therefore, the internationally converged debt restructuring standards may not be suitable for my country's listed companies.