IFRS in China

2018-01-01


The Chinese Accounting Standards for Business Enterprises (ASBEs) issued in February 2006 were substantially converged with IFRS, which was recognised in the Joint Statement of CASC Secretary-General and the Board Chairman signed in November 2005. Based on the Roadmap for Continuing Convergence of Chinese Accounting Standards for Business Enterprises with International Financial Reporting Standards released by the Ministry of Finance of China in April 2010, the ASBEs will be revised and improved in accordance with the revision and improvement of IFRS, in order to continue convergence of the ASBEs with IFRS.


On 18 November 2015, The IFRS Foundation and the Chinese Ministry of Finance announced the formation of a joint working group to explore ways and steps to advance the use of IFRS Standards within China, especially for internationally-oriented Chinese companies. The announcement forms part of a comprehensive update to the 2005 Beijing Joint Statement. The 2015 Joint Statement:

  • establishes a joint working group to explore steps and ways to advance the use of IFRS Standards within China, especially for internationally-oriented Chinese companies;

  • identifies the vision of Chinese Accounting Standards becoming fully converged with IFRS Standards, which is consistent with the G20-endorsed objective of a single set of high quality, global accounting standards; and

  • encourages continued co-operation between the Board and Chinese stakeholders in the future development of IFRS Standards.


Organisation

Accounting Regulatory Department, Ministry of Finance, People’s Republic of China

Note added by IFRS Foundation: As Special Administrative Regions of the People’s Republic of China, both Hong Kong and Macao adopt their own financial reporting standards. Accordingly, there are separate jurisdictional profiles for Hong Kong and Macao.

Role of the organisation

The Accounting Regulatory Department of the Ministry of Finance of China is responsible for the setting of accounting standards for business enterprises, among other things, ie it is the official standard-setting body in the People’s Republic of China. 

Website
www.mof.gov.cn

Are all or some domestic companies whose securities trade in a public market either required or permitted to use IFRS Standards in their consolidated financial statements?

No, the use of IFRS Standards is not permitted for domestic companies. All Chinese companies whose securities trade in a public market in China are required to use Chinese Accounting Standards for Business Enterprises (ASBEs) for financial reporting within mainland China.

It should be noted, however, that Chinese companies whose securities trade on the Stock Exchange of Hong Kong may choose among IFRS Standards, Hong Kong Financial Reporting Standards (HKFRS), and ASBEs for purposes of financial reporting to Hong Kong investors. Those financial reports are in addition to the ASBE financial reports that the Chinese companies issue within mainland China. At 30 September 2017, 398 Chinese companies trade in Hong Kong (on the ‘Red Chip’ and ‘H-Share’ main boards). The financial reporting frameworks used by those companies in Hong Kong are as follows:


Which standards?Number of companiesPer cent of companiesMarket capitalisation (US Dollars)Per cent of market capitalisation
IFRS Standards 85 21% 398,193,026,817.17 27%
 HKFRS 258 65% 1,046,099,745,913 70%
 ASBE 55 14% 38,505,889,963 3%
 Total 398 100% 1,482,798,662,693 100%

 

There are also a number of Chinese companies that use IFRS Standards for the purpose of trading in the United States and in Europe.


he auditor's report and/or the basis of presentation footnotes states that financial statements have been prepared in conformity with:

Chinese Accounting Standards for Business Enterprises. 


Are IFRS Standards incorporated into law or regulations?

ASBEs are a part of law and regulations in China. 


Other comments regarding use of the IFRS for SMEs Standard?

The Chinese Accounting Standard for Small Entities was published by the Ministry of Finance in October 2011. China used the IFRS for SMEs Standard as an important reference when developing the Chinese Accounting Standard for Small Entities.




Sourse: https://www.ifrs.org/use-around-the-world/use-of-ifrs-standards-by-jurisdiction/china/#application



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