Emmanouil Schizas, March 2013. This paper summarises and puts into context the findings of a 2013 ACCA report on research into IFRS convergence in China.
The research behind this report was commissioned by ACCA in late 2011 as part of an initiative to examine the impact of International Financial Reporting Standards (IFRS) on the global economy.
The research contributes to a series of reports published by ACCA on the subject, which together make a strong case for global standards:
All the above research shares a common understanding: that investors are the primary users of company accounts and that informing their decisions is one of the key purposes of financial disclosures. Yet investor opinion is not generally seen by policymakers as a reference point against which to prioritise issues, nor does it drive an agenda for continuous improvement in transparency or measures to meet the needs of shareholders (ACCA and Grant Thornton 2012). ACCA’s work on IFRS aims, among other things, to rebalance the debate by placing the needs of investors at its heart.
In China, ACCA’s research has consistently documented the increasing sophistication of national exchanges and investors. ACCA has most recently worked with Deloitte (ACCA 2010) and the Shanghai Stock Exchange (ACCA 2011) to understand preparers’ and investors’ perceptions of and expectations from narrative reporting, and highlighted the need for better disclosures of matters relating to risk, internal controls and governance. ACCA research has also examined investors’ and finance professionals’ roles in driving the greening of the Chinese economy (ACCA 2012) and noted the potential for investors to drive disclosure and transparency in the supply chain.
As a global accountancy body, ACCA strongly supports the move to one system of worldwide accounting standards, as urged by the G20 in their summit meetings since the global financial crisis of 2008–9. ACCA believes that the business environment stands to benefit from the enhanced comparability and transparency this will introduce, but this process hinges on successful convergence between national and global standards in key economies such as China.