The Global Commercial Market and the Firms Accounting System in China
The Chinese Ministry of Finance has the power to establish and monitor the accounting standards across the specific country. because the accounting needs of the organizations operating in the country’s public and private sector were many, the establishment of an organization that would deal with the application and the enforcement of accounting standards was considered as necessary. In the past – referring especially to the pre-1980s period – all relevant issues were handled by the appropriately authorized governmental departments but with the increase of commercial activities across China, appropriate measures should be taken for the establishment and monitoring of appropriate accounting practices in firms of all sectors – in this way, the attractiveness of the Chinese market towards the foreign investors would be expected to be increased. The Chinese Institute of Certified Public Accountants is an organization that was developed in order to support the development of the country’s existing accounting standards – also to introduce the principles of international accounting standards so that a balance to exist – in terms of similar theoretical basis and practical aspects – between the existing accounting standards and the ones that have been already applied in countries of the West. the above Institute was first established in 1988 and is considered as one of the most important efforts of the Chinese government to improve the existing accounting standards by using the principles of international accounting standards (OECD, 2003, p.162).