As the global economy becomes more integrated, Chinese Accounting Standards (CAS) are gradually moving towards convergence with International Financial Reporting Standards (IFRS). So far, CAS and IFRS do still have a number of variations including content, format and setup mechanisms. This paper analyzes three main differences in the content between CAS and IFRS regarding the financial instrument, biological asset, and lease measurement. These differences may cause problems for international practitioners and investors. In addition, the paper discusses the influences of the global convergence of CAS and the challenges faced by the technology industry, listed companies, and government. It is recommended that China need to consider the domestic economic situation and policies when adopting IFRS, and properly adjust the content of the standard accordingly, so as to better meet the domestic needs and development prospects. And industries should balance convergence and market challenges and work together to shape a practical and comprehensive China accounting system to enable China to develop globally further.

In 2006, China published new Chinese Accounting Standards (CAS), and required Chinese companies to apply it since 2007. One big change made in new CAS is the method account for long-term equity investments, which provide opportunities for the parent company to manipulate its parent earning through transferring more dividends from subsidiaries. Based on the background, this paper investigates the effect of changes in accounting standards on corporate’s behaviors for Chinese listed companies. We find that subsidiaries of Chinese listed firms make huge payments of cash dividends to their parent companies to avoid losses or decline in earnings of parent companies after adoption of new accounting standards. In further, we find that cash dividend payments by subsidiaries significantly increase debt financing of the parent company. Overall, our study shed lights on how accounting standards reform trigger changes in corporate behaviors.

Today's world economy and technology are developing rapidly, companies must increase their R&D activities in order to maintain their core competitiveness. However, this initiative brings a surge in R&D expenses, which affects corporate efficiency and national tax revenue. This paper focuses on the reality of over-capitalization of R&D expenditures and surplus management by pharmaceutical, high-tech, and other R&D-intensive enterprises through controlling the accounting treatment of R&D expenditures under Chinese accounting standards. In order to carry out the study, this paper first compares the three mainstream international treatments of R&D expenditures, and at the same time collates the possible motives of enterprises in choosing the capitalization node of R&D expenditures. And focus on HISUN Pharmaceutical and analyze the consequences of its long-term over-capitalization of R&D expenditures for the purpose of whitewashing its financial statements through a longitudinal comparison of itself and a horizontal comparison with the industry. At last, this paper puts forward corresponding suggestions for regulators and enterprises themselves to strengthen the management of R&D expenditures. Hope this paper will help market investors to better understand the statements and make better investment decisions.

In order to maintain lasting competitiveness, pharmaceutical enterprises continue to increase innovative drug development efforts, resulting in rapid growth of R&D expenditure. According to Chinese accounting standards, enterprises have a certain flexibility in accounting for research and development investment. Taking H Company as the case object, this paper finds that: first of all, declining profit and continuously rising R&D investment may be the main reason why H Company's R&D investment changes from full cost to partial capitalization. Second, if the R&D expenditure in 2022 is adjusted using the previous accounting method of full expense, it will lead to changes in profits, information comparability and tax costs after the implementation of the capitalization policy of partial R&D expenditure. Due to the strong subjectivity of the accounting treatment of pharmaceutical enterprises' R&D investment, this paper provides two levels of suggestions for enterprises and regulatory authorities, aiming at solving the problems faced by enterprises in the capitalization of R&D investment, and to provide reference for solving the problem.

This study discusses the changes in China's accounting standards around 2019 and the possible impact of China's newly revised accounting standards on the earnings management of Chinese boss companies. This paper discusses the evolution of accounting standards in China, including the adoption of IFRS and subsequent revisions to the standards. This paper analyzes the impact of changes in the accounting treatment of financial instruments and debt restructuring on earnings management. In general, changes to Chinese accounting standards have curbed some of the manipulation of earnings by listed Chinese companies. But the revised accounting rules make fair-value measurement in China more extensive. As the development of China's capital market is not yet sound, many financial assets do not have public consistent or credible channels to obtain fair value, whether the newly revised accounting standards can improve the quality of accounting information in China remains to be investigated.

PurposeThis study tests the effect of accounting standards precision on financial restatements and the influence of accounting standards precision on different types of restatements (including errors and irregularities). What is more, the heterogeneity between accounting standards precision and financial restatements is verified in this paper. In the further analyses, the authors also examine the mediating roles and moderating roles on the correlation between accounting standards precision and financial restatements.Design/methodology/approachThe focus is placed on an unbalanced panel of 18,766 samples over the period of 2007–2017.FindingsThe authors find that firms' restatements decrease when standards are more principles-based (low accounting standards precision). Especially, irregularities significantly decrease when firms' standards are more principles-based. What's more, the negative relationship between principles-based standards and restatements is more significant in “big four” accounting firms. Moreover, from the mediating effect results, the authors find that low accounting standards precision decreases a firm's financial reporting complexity and increases equity restriction, which in turn can help decreasing its financial misreporting. From the moderating effect results, the authors find that the higher the TOP1 and the more analysts following the firm, the higher the benefit of accounting standards precision to misstatements.Originality/valueThe results of this study provide a theoretical reference for accounting standard setters and are helpful to inform investors and regulators about the influence of Chinese accounting standards on restatements.

Whether accounting information can meet the needs of users depends on the quality of accounting information. The internationalization level of accounting standards reflects the degree of integration of a country's economy with the world. With the development of economic globalization and rapid progress of science and technology, the market economy is becoming more and more active. Meanwhile, the trade between various countries is becoming more and more frequent, which promotes the economic and trade cooperation between various countries. The demand for international convergence of accounting standards is becoming increasingly strong, and the relevant concept arises at the historic moment. In order to make the cooperation between countries more convenient and fast, countries began to integrate into the financial regulatory framework reform process of cooperation, and strive for the global unified high-quality accounting standards can be completed in a timely manner. This paper compares and analyzes the differences between Chinese and international accounting standards in terms of information quality characteristics from two aspects of content and level, summarizes the convergence and development trend of international accounting standards, and puts forward some suggestions for China to formulate accounting standards.

ABSTRACT Customer relationships are important strategic resources. With a sample of A-share listed firms from 2007 to 2020 in China, this paper examines the recognition and value relevance of customer-related intangible assets. Current accounting standards require an acquirer to recognise identifiable intangible assets acquired in the business combination separately from goodwill. However, stakeholders question the usefulness of the information about customer relationships that are difficult to value reliably. The IASB and IFRIC have discussed a lot about whether to continue to separate customer-related intangible assets from goodwill. We find that firms with more R&D investments are more likely to recognise customer-related intangible assets. We also find that the book value of customer-related intangibles is positively associated with share price, which means recognised customer-related intangibles provide useful information to investors. We report empirical evidence in support of both international and Chinese accounting standards for separate recognition of identifiable intangible assets.

This paper explores the impact of auditing firms on the implementation of the newChinese Accounting Standards for Enterprises 22(new CAS 22), which converges with IFRS 9. We find that the Big4 firms focus on fair value measurement and application of the expected credit loss (ECL) impairment model, whereas the LocalTop6 firms primarily focus on the classification of financial assets. The results indicate that effective implementation of the new standards mainly depends on standardized procedures and professional techniques of auditing firms, as the Big4 firms exhibit better implementation of the new standards in terms of items that generate greater risk and uncertainty than do local large auditing firms in China. In addition, we further test how cross‐listing affects the role of auditing firms in implementing the new standards and find that the Big4 firms play a more significant role for A‐share only companies than A + H companies. The findings reveal the challenges associated with implementation of IFRS 9‐based new CAS 22 in China.

Accounting is a language to record economic life, and with the rapid development of productivity and economic and social progress in China, accounting standards are constantly updated to meet the needs of accounting practice and promote the effective operation of socialist market economy. China promulgated the Accounting Standards for Business Enterprises in 1992 as the highest authority of accounting regulations, which has been developed and improved for nearly 30 years, but it is undeniable that the current Chinese accounting standards (CAS) have borrowed from Western accounting standards especially the International accounting standards (IAS) to a considerable extent. In this paper, from the development history of CAS, through the analysis of the causes and effects of the overall differences and specific differences between the two systems on the financial statements of enterprises, combined with the SWOT-PEST model, we make a reasonable outlook on the development of CAS.

Both Chinese and Russian accounting standards follow the IFRS convergence route, despite there being a difference in the degree of international convergence between the two countries. The article examines the specific criteria for financial statement presentation in China and Russia and discovers discrepancies in the basic requirements for financial statement presentation, financial statement composition, and information in notes to financial statements in both countries. The comparison in this article is used to provide theoretical guidelines for reciprocal economic investment between the two countries.

ABSTRACTAfter 30 years of orthodox socialism, in 1979 China opened the door to a market economy. The unleashed entrepreneurial spirit and rapid accumulation of savings and investment led to unparalleled economic growth. Remarkably, investment, companies and even stock exchanges proceeded without accounting standards as known in the rest of the world. It would be another quarter century before Chinese accounting standards incorporated the fundamental accounting principles needed for guidance in the context of a modern, flexible, and ever evolving, market economy. The article attributes the lag to a combination of government control over accounting standards and the legacy of socialist concepts that equated accounting with bookkeeping rather than the modern accounting goal of accurately valuing both receipts and outgoings and the value of entitlements and obligations to reveal to current and prospective owners, investors, and lenders the true worth of an enterprise.

Subject. This article analyzes the reasons why China chooses convergence with international accounting standards, as well as the problems arising in the transition to the internationalization of the Chinese accounting standards, and the prospects for further development of the Chinese accounting. Objectives. The article aims to analyze the reasons for the internationalization of the Chinese accounting standards and offer recommendations on the problems that can be encountered in this process. Methods. For the study, I used analysis, synthesis, and other general scientific methods. Conclusions. In the process of convergence of the Chinese accounting standards with the international ones, experts proceed from national conditions, learning new things, acquiring advanced knowledge. The convergence of China's accounting standards with international practice is currently undergoing continuous improvement and development. In order to stimulate exchanges, raise capital and reduce communication costs, China must keep pace with the development of the world situation and establish solid market economic and corresponding accounting systems.

At present, the trend of economic globalization is in full swing, the trade exchanges between countries around the world are deepening, and the international financial capital market is booming. At the same time, the world’s scientific and technological revolution is changing with each passing day, and the productivity level of each country has developed rapidly, thus driving the rapid growth of the world economy. In this case, if the accounting standards of countries around the world, which reflect the processing means of economic information, are unable to converge with the international community, in the long run, It will inevitably lead to great international trade barriers, which will make the transaction costs remain high, and the transmission of key economic information lags behind slowly, eventually resulting in unnecessary waste of means of production, thus making it difficult to promote the coordinated progress of the economies of various countries efficiently. Therefore, in order to establish a good financial capital market order, maintain a stable and positive world economic level, and improve the happiness index of people all over the world, it is particularly necessary to call on all countries in the world to build international convergence of accounting standards. As the mainstay of world trade, China is obliged to improve its own accounting system and adapt to the global economic development. Therefore, its accounting standards will strive to converge with internationalization in the future, which is not only just needed by China’s own economic development. At the same time, it is also of great practical significance for the development of the world economy. However, due to the influence of specific factors such as national conditions, economic environment and historical issues, the internationalization route of China’s accounting standards has a long way to go. Based on this, we should rationally analyze the background and initial intention of the convergence of China’s accounting standards to international accounting standards, and deal with differences and consequences according to China’s accounting treatment and international standards brought by specific business environment. Then, proceeding from China’s national conditions, combining with the differences in the above accounting standards, objectively analyzing the problems and the deeper reasons behind the internationalization of China’s accounting standards by combining quantitative and qualitative methods, finally, prescribing the right medicine, proceeding from reality, taking the basic principle of Marxism-materialist dialectics, and realistically making targeted suggestions on the internationalization convergence of China’s accounting standards, aiming at making a modest contribution to the academic development of accounting standards by taking China as a reference.

PurposeThis article is a reply to “On theoretical engorgement and the myth of fair value accounting in China” Nobes (2019) from the authors of “Adaptability to fair value accounting in an emerging economy: A case study of China's IRFS convergence” (Peng and Bewley, 2010) and “The Winding Road to Fair Value Accounting in China: A Social Movement Analysis” (Bewley et al., 2018).Design/methodology/approachThis article engages directly with the arguments of the criticism.FindingsThis article argues that the author of the commentary misunderstands the purpose, content and findings of both papers. By providing only a narrowly focused technical analysis of the new Chinese accounting standards, the author fails to see that their qualitative research approach reveals important, complex social and political factors at play in China's attempts to adopt modern international accounting principles. The commentary expresses a view that accounting is a neutral technology that needs only to be clearly defined and enumerated to be correctly implemented, whereas this research takes a much broader and deeper perspective. The authors seek to understand how China was able to successfully adopt fair value accounting standards in 2006, whereas an earlier attempt to introduce fair value in 1998 had led to abuse of fair value measurements and the eventual repeal of fair value regulations in 2001.Practical implicationsThis article helps clarify the purpose of qualitative accounting research, the role of theory in such research and the usefulness of theory in describing and explaining empirical case facts related to changes in accounting standards, particularly in an international context.Originality/valueThis article contributes to a better appreciation of qualitative accounting research.

Revenue Recognition about “Chinese Accounting Standards for SMEs”

ABSTRACT This paper investigates the impact of IFRS adoption on Chinese listed companies. More specifically, this study shows the empirical evidence of the effect of a new set of Chinese accounting standards (CAS) introduced in 2007 on firms’ performance. Analyzing 7020 firm-year observations, this study finds that, compared to pre-IFRS adoption regime, firms’ performance significantly improves after IFRS adoption. A set of sensitivity analysis provides consistent findings about the impact of new CAS on firms’ profitability. As for the implication of international accounting standards, these findings suggest that adoption of global accounting standards is bringing positive change in the capital market through firms’ development in terms of profitability.

This study investigates China's convergence towards International Financial Reporting Standards (IFRS) using generally accepted accounting principles (GAAP) differences data disclosed in AH‐share companies’ annual reports from 2006 to 2017. We firstly find that 92% of AH‐share companies disclosed GAAP differences in 2006, immediately prior to implementation of converged Chinese accounting standards (CAS). This ratio decreased to 88% in 2007, 58% in 2010, and 38% in 2011, respectively. After 2011, less than one third of AH companies disclosed GAAP differences. Secondly, an increasing number of AH companies (35%) have published CAS‐based financial statements in Hong Kong from 2014. Thirdly, except for the first few years after 2007, the disclosed GAAP differences have dropped to a very low level; since 2010 the net profit and net assets GAAP differences ratios have been below 0.5%. Fourthly, reduction of the disclosed GAAP differences appears to be the result of efforts by Chinese standard setters and regulators, work related to the International Accounting Standards Board, or changes in China's special socio‐economic environment. Distinct from word‐by‐word comparison between CAS and IFRS, this research shows that China has achieved its original goal, namely an enterprise applying CAS should produce financial statements that are the same as those of an enterprise that applies IFRS. Our findings provide insights regarding China's institutional evolution in terms of the country's IFRS convergence effort, which are useful for further empirical study.

Unconditional conservatism under the Chinese version of IFRS

The continuous development and progress of international economic integration has resulted in the increasing of economic and trade exchanges between various countries. In order to implement a more systematic corporate financial supervision mechanism effectively and adapt to the needs of economic development, it is necessary to clarify corporate accounting standards and international financial reporting standards. The relationship between them are crucial to improve the transparency of financial statements and optimize management levels. This paper analyzes the differences between Chinese business accounting standards and international financial reporting standards as well as discusses the convergence process and convergence strategy methods for reference.