Study on Accounting Practices in the People's Republic of China

Project Overview

Location:
China

Dates:
March 2010 -

Funding Body:
European Commission

Project Status:
Ongoing

In 2003, the PRC requested that the European Union grant it market economy status (MES) for the purpose of trade defence investigations. At that time, China was considered by the EU as an economy in transition. MES requests are evaluated on the basis of five criteria which aim to establish whether the economic conditions in the country concerned have evolved to the extent that prices and costs can reliably be used for the purpose of trade defence investigations. One of the MES criteria requires implementation and enforcement of quality accounting and auditing standards through a requirement on quality corporate governance.

The objectives of the Study on Accounting Practices in the People’s Republic of China is to investigate the accounting and auditing practices of different Chinese companies to (a) determine whether transparent and non-discriminatory company law, which ensures adequate corporate governance (application of international accounting standards, protection of shareholders, public availability of accurate company information), is in place and implemented in China; and (b) make viable suggestions to improve, if necessary, accounting and reporting practices in China in order to bring these practices fully in-line with international accounting and auditing standards.