What is role of the Accounting Law of the PRC?

The Accounting Law of the PRC (revised on 1 July 2000) has highest authority on accounting sector in China. It sets out general accounting principles for all enterprises, including the nature and role of accounting and basic principles. It empowers the Ministry of Finance of PRC to administer accounting affairs and to establish uniform accounting regulations […]

What are the major differences between PRC accounting system and those in other countries?

In establishing your company’s accounting structure, one of the first tasks is to identify and to reconcile the differences in accounting practices used by your parent company and the rules in China. The PRC does not exactly follow international accounting policies and guidelines, although it is moving on this direction and so far, many of the […]

What is Chinese Accounting Standards (CAS)?

The Ministry of Finance (“MOF”) has been for a long time working to develop a set of Chinese Accounting Standards that are largely in line with International Financial Reporting Standards (“IFRS”). The MOF issued its first Standard in 1997. To date, 17 standards have been adopted and others are still under preparation. A complete list […]

How is the Accounting System for Business Enterprises of PRC prepared?

In January 2001, the Ministry of Finance (“MOF”) adopted a comprehensive Accounting System for Business Enterprises (“the System”). The System is based, partially, on the experience of the MOF in implementing the Accounting System for Joint Stock Limited Enterprises and, partially, on the existing individual Chinese Accounting Standards (“CAS”) issued over the past few years.

Which system should joint stock limited enterprises follow?

Starting 1 January 2001, all joint stock limited enterprises (“JSLEs”) were required to follow the System – except enterprises in banking, insurance, and other specialised financial industries. When the System became effective on 1 January 2001, the old Accounting System for JSLEs was abolished. Starting from 2001, enterprises besides JSLEs have been encouraged to follow […]

Is the Accounting System applicable to FIEs?

As of 1 January 2002, the MOF extended the applicable scope of the System to all foreign invested enterprises excluding those in banking, insurance, and other financial service industry.

What is the accounting system for financial institutions?

Early in 2002, the MOF issued a new separate – though similar – accounting system for Financial Institutions. It must be adopted, starting 1 January 2002, by all listed and foreign invested banks, insurance companies, brokerages, leasing companies, and finance companies. Unlisted financial institutions that are joint stock limited enterprises are encouraged to follow the […]

What are the differences between the Accounting System and Accounting Standards?

While both are formulated and promulgated by MOF, there exist certain differences them. First, the application scope is different. Specific accounting standards are mostly applicable to joint stock limited companies, although sometimes the standards apply to other enterprises too. The Accounting System applies not only joint stock limited companies, but also other qualified enterprises. Second, […]

What are the four basic accounting assumptions in China?

(a) Accounting Entity An accounting entity can be an enterprise, an enterprise group or the accounting department of an enterprise. (b) Continuity Postulate The Accounting System stipulates that, under normal circumstances, the accounting treatment to be adopted by enterprises should be based on continuity postulate. For instance, the historical costing method is used for the […]

What are the basic principles of accounting in China?

The general principles guiding and evaluating accounting work comprise three categories. general principles for evaluating the quality of accounting information; general principles for recognizing and measuring accounting elements; and general principles for revising the above two sets of principles.