INTERNATIONAL ACCOUNTING CH 5 HW - International Accounting...

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T Anderson International Accounting Chapter 5: Comparative Accounting 1. How might the liberalization of accounting and auditing services in China result in an improved level of investor protection? Gradual capital market liberalization will open up international investment opportunities for national investors. Poor rating assignments of national firms could therefore trigger an immense outflow of investment capital providing national firms with strong incentives to implement sound and internationally comparable accounting practices. 2. How have economic reforms affected the demand for accounting services in China? The economic reforms have increased demand for accounting services in many ways. Key aspects of the economic reforms in China include privatization of SOEs, liberalization of controls, commitment to encourage private investment in business and to attract foreign investment, and emphasis on commercial viability and competition among businesses. All these are integral parts of a market system, and lead to increased demands for accounting services. For example, when businesses compete, they become increasingly cost conscious. Investors need accurate information about the financial performance and position of the businesses they have invested in. When Chinese companies seek to raise funds in overseas markets or the government attempts to attract foreign investors, it is important to ensure that proper financial records are kept, and information is disclosed using internationally acceptable standards. Further, various government regulations on the implementation of economic reforms require the involvement of independent auditors. 3. In what way has the development of accounting & auditing in China differed from other countries? A unique feature in the development of accounting and auditing in China is that, unlike in many other countries, until recently (1998), these two areas developed as two rival disciplines competing with each other, supported by two separate government agencies. 4. What are the main pressures for accounting regulation in modern China? The pressures arise from the need to change from an accounting system designed to provide information to government for planning purposes to a system that is capable of providing useful information for economic decision making. China has expressed a commitment to adopt IFRSs. This is particularly important to China because of the requirement under WTO membership and the need to attract foreign investment. The ultimate objective of accounting regulation is to achieve a high level of compliance with the mandated reporting standards. This requires an adequate number of professionals who are willing and able to implement the
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This note was uploaded on 02/09/2011 for the course ACCT 547 taught by Professor Sc during the Fall '11 term at Campbell University .

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INTERNATIONAL ACCOUNTING CH 5 HW - International Accounting...

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