Ifrs for China

Same as other developing countries, there is no doubt that China has to adopt IFRS. However, it is not easy for such a centralized communist country to fully obtain the standards. This case study is going to explain the difficulties of obtain the IFRS, and the major reasons of adopting IFRS also will be discussed.

Even there are too many difficulties; to adopting IFRS is still a necessary step. One of the reasons for this is it improves the information disclosure, which helps to clean the financial market and enhance the sustainability of the economic environment. Moreover, once the report standard being harmonized, more and more foreign investors will be attracted, as these investors require more reliable financial reports to make right decisions. Not only for attracting the oversea funds, harmonizing the IFRS also allows Chinese entities list on overseas stock markets effectively. The problem of not adopting IFRS also includes: some large Chinese companies have to face high information cost for their oversea subsidiaries

As China has become a major trading nation in the world and officially joined WTO on 2006. Nowadays, the country has more influence on the global market. Therefore, all the rest of the world desire high levels of transparency of the Chinese market.

In summary, I believe adopting IFRS is a milestone for the accounting and audit industry in developing countries, such as China. The harmonization will move the country towards a more modern economic model and help investors make more sensible decisions. However, to fully obtain the standard, it still needs lots of effort.