China affirms commitment to converge with IFRSs
15 February 2006
A statement was made today at a ceremony in Beijing, PRC, where the Chinese Ministry announced the adoption of new Chinese accounting standards system that brings about substantial convergence between Chinese standards and International Financial Reporting Standards (IFRSs). At this ceremony, the Chinese Ministry of Finance affirmed China's commitment to convergence with IFRSs. A statement from the Chinese Ministry will be available shortly.
The full text of Sir David Tweedie's speech is below.
Statement of Sir David Tweedie, Chairman, International Accounting Standards Board
I am honoured to be here today to mark what I believe is an important step for the development of the Chinese economy and its place in the world’s increasingly integrated capital markets. The adoption of the new Chinese accounting standards system brings about substantial convergence between Chinese standards and International Financial Reporting Standards (IFRSs), as set by the International Accounting Standards Board (IASB). Like the United States and Japan, China is committed to convergence with IFRS.
The new standards are the culmination of what is, in my view, an extraordinary effort by the Ministry of Finance of the People’s Republic of China and the China Accounting Standards Committee (CASC). My fellow members and senior staff of the International Accounting Standards Board are delighted to have assisted in this effort. Over the past twelve months, we have made several trips to Beijing to work with the officials and staff of the Ministry of Finance, and we have been impressed by their dedication to this undertaking and their willingness to consider new solutions. We will continue to co-ordinate with the China Accounting Standards Committee in the future.
The benefits of these accounting reforms for China are clear. The new Chinese standards that incorporate accounting principles familiar to investors worldwide will encourage investor confidence in China’s capital markets and financial reporting and will be an additional spur for investment from both domestic and foreign sources of capital. For Chinese companies that are increasingly playing a global role, the acceptance of the new standards should also reduce the cost of complying with the accounting regimes of the different jurisdictions in which they operate.
I do not see this as the end of the efforts to achieve convergence between Chinese accounting standards and IFRSs. As both the Ministry of Finance and the IASB have acknowledged, convergence is a process. The intention is that a company applying Chinese accounting standards should produce financial statements that are the same as those of a company that applies IFRSs. I believe that is a realistic and desirable goal in the light of the progress that has been made.
In the coming months and years, the IASB will intensify its convergence efforts in China. This is reflected in the fact that China is participating in many of the IASB’s activities. Our oversight body, the International Accounting Standards Committee Foundation, recently appointed Liu Zhongli, President of the Chinese Institute of Certified Public Accountants and former Minister of the Ministry of Finance, to the organisation’s Trustees. Vice-Minister Wang Jun serves on our Standards Advisory Council. And we have the benefit, for the second time, of having a senior staff member from the Ministry of Finance in residence on our staff. We look forward to working with them. We are also sure that the Ministry of Finance will make a strong contribution to achievement of our objective of a single set of global accounting standards.
Thank you.