MAINLAND enterprises are expected to face an overhaul of their accounting practices when the complete set of China's new accounting standards are announced in the middle of this year.
The Ministry of Finance (MOF) plans to apply the new accounting rules, being drafted for almost three years, on selected shareholding enterprises from January 1, 1997, according to Chen Shinyuan, associate professor at Shanghai University of Finance and Economics accountancy department. The project to upgrade the accounting system was sponsored by the World Bank and started in mid-1993.
Mr Chen said drafts of the 30 accounting standards had already been released, but the ministry was facing the thorny task of incorporating recommendations from foreign and mainland advisers.
'These standards might contradict each other, and we need to unify the approach adopted in these standards,' he said.
'The problem is: are we going to use the international practices or the Chinese ones when contradictions are found?' There are fears that the profits figures of many enterprises might be affected when they shift from the present accounting practices to standards based on the international practices. Mr Chen said the limited number of certified accountants would also affect the introduction of new standards.
'The MOF is also drafting a set of guidelines at present,' Mr Chen said. 'The standards are usually vague and we need more detailed guidelines.' Hong Kong Society of Accountants assistant director Tommy Fung Hon-kwong said the eventual application of the new standards on all enterprises presented a headache. 'The accounting practices of shareholding companies and state enterprises are so different. It is difficult to unify the different approaches being adopted at present.' He expected listed shareholding companies would be chosen as pilot cases.
