Accounting Standards in China and Australia

Until recently, chinaware has used a set of be standards that were quite unique in their records. These standards were the legacy of a socialist period in Chinese history and rather than memory records of loss and profit for a pot direct in China, they mainly concerned themselves with retention track of all of the assets available to the corporation.By not keeping close tabs on the debts that a corporation owes, the accounting standards in China behave long been considered lax by the outside world and have hindered international companies who wish to have headquarters in China.For instance, a corporation in China with holdings internationally, such as in the United States, mustinessiness create end of the year accounting reports using the Chinese write up Standards, another set using the international Accounting Standards, and a deuce-ace using the North American Generally Accepted Accounting Principles, creating an clog of work and an extreme cost to the corporation.Re cently the Finance Department of Chinese political sympathies has begun a process which will translate the current Chinese accounting methods from their archaic status to where they will more closely mirror the International Accounting Standards which in corporal the Generally Accepted Accounting Principles.Previous to this decision to crystalize the way that Chinese corporations report their accounts, the Chinese system involved just now classification of ownership, industry, and governance, giving companies an extreme amount of leeway in the ship canal in which they conducted business. Now the Chinese government has instituted that each corporation must keep track of all debits and credits, report manufacturing costs as sound as capital maintenance, and provide yearly financial statements.The first authentic accounting standards in China were implemented in 1997 and changes continue to be made to bring the countrys financial practices up to date. before long this transforma tion is still in progress, so any foreign caller-up with a subsidiary in China must still concur with not only their countrys accounting practices but alike with the Chinese straight telephone circuit accounting practices which accommodate for a much slower depreciation of capitalized assets.For those wishing to not use the straight line method, the only way to use an accelerated accounting method with regards to Chinese holdings is to receive explicit permission from the Ministry of Finance. Another difference in Chinese accounting methods is the difference in revenue deductibility.For instance, China charges significant tax charges on intercompany transactions and treats transfer pricing of the upmost importance in order to receive a large cut of international taxes. nonsensical interpretation of Chinese tax laws can lead to severe fines for corporations.In Australia, the corporate accounting practices previously used have also come under(a) fire in previous years for bei ng widely incompatible from internationally accredited accounting standards. In response, Australia began to work the internationally accepted accounting principles into their current system, effective January 1, 2000, and have also developed the financial Reporting Council which is responsible for overseeing the accounting practices of both public and private corporations operating in Australia.The previously lax Australian reporting standards which did not postulate corporations to conform to one specific type of accounting practices nor give sloshed guidelines in so far as what reports were required by the government are being phased out by the International accounting standards which allow Australia to develop along with the global economy.Australia has also instituted an Australian Accounting Standards Boards to sporadically re-evaluate corporate accounting practices in Australia as well as use the new standards being phased in. Australia is working to harmonize their st andards with those of the International Accounting Standards commissioning and is also a part of the G4+1 global group which monitors the orbit of international accounting standards.Works CitedAustralian Government. (2009, May 5). Australian Accounting Standards Board. Retrieved May 5, 2009, from Australian Accounting Standards Board http//www.aasb.com.au/Home.aspxChina Accounting Standards. (2007, February 15). Retrieved May 5, 2009, from China Orbit http//www.chinaorbit.com/china-economy/chinese-accounting-standards.htmlLehman Brown. (2009, February 12). Chinese Accounting FAQ. Retrieved 5 May, 2009, from Lehman Brown http//www.lehmanbrown.com/FAQ-Acc.htmQueensland University of Technology. (2008, June 15). Accounting Standards. Retrieved May 5, 2009, from Queensland University of Technology subroutine library http//www.library.qut.edu.au/learn/type/accountingstandards.jsp