CHAPTER 5
COMPARATIVE ACCOUNTING

Chapter Outline

China

I. There are some unique features in the accounting profession in China. They include the following: A. Until the 1980s, those who carried out accounting work were not held in high regard in society, and this has had an adverse effect on the development of the accounting profession in China. B. Accounting and auditing in China have taken different paths in their development processes. Auditing firms audited mainly domestic companies, and were under the State Administration of Audit (SAA), whereas accounting firms focused on companies using foreign investments and were sponsored by the Ministry of Finance. C. Unlike in the U.K., where there was a good legislative and judicial environment during the early stages of the development of the profession, in China, a market-oriented legislative and judicial environment is still emerging. D. Unlike in the U.K., where auditors receive support from the established professional bodies, these support mechanisms are still lacking in China.

II. The recent economic reform program stimulated the growth of the accounting profession in China. A. With the recognition by the State of joint stock company form, the demands for financial information from investors and other interested parties increased. B. The establishment of two stock exchanges helped rapid growth of the accounting activities. C. Various government regulations on the implementation of economic reform measures require the involvement of independent auditors. D. The laws on joint ventures with foreign companies require the audit of annual statements. E. International accounting firms were allowed to be involved in training local auditors and setting auditing standards.

III. There are clear signals that Anglo-American