China's Accounting Sector Scores Glorious Achievement: Minister

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Last updated at: (Beijing Time) Tuesday, November 19, 2002

China's Accounting Sector Scores Glorious Achievement: Minister

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China's accounting reform has made great headway and China's accounting market is opening wider in phase manner to the outside world, said Chinese Finance Minister Xiang Huaicheng Tuesday in Hong Kong.

Xiang made the remarks while delivering a speech at the opening ceremony of the 16th World Congress of Accounts held Tuesday morning.

Since the early 1990s, China's Ministry of Finance has initiated accounting reforms and issued a series of standards and rules, which have put an end to the accounting model established and operated under the planned economy for over four decades and put in place a new model that goes well with the market economy and the international practice, Xiang noted.

In 1999, a second amendment was made to the Accounting Law of the People's Republic of China, which emphasizes the management responsibility for the accounting practice and truthfulness and completeness of the accounting information, strengthens the tripartite accounting monitoring system and stipulates severe disciplinary actions for violation of accounting laws and rules, he added.

Xiang pointed out that these reform measures in accounting have received extensive international recognition and been acclaimed as the example of successful accounting reform in transitional economies and the developing countries.

According to the finance minister, the opening of China's accounting market goes hand-in-hand with its accounting reform and development.

Since the early 1980s, China has opened its accounting market step by step, which offers opportunities for foreign firms to set up representative offices, member firms in China or apply for temporary practice, and for foreign nationals or residents from Hong Kong, Macao and Taiwan to register for unified national qualification examination for the Certified Public Accountants (CPAs), Xiang said.

He added that candidates who pass the examination can apply for membership of Chinese Institute of Certified Public Accountants (CICPA).

At present, 11 international firms have set up 26 member firms in China. Moreover, more than 10,000 candidates from 20 countries and regions sat for the examinations, 405 of which passed the examination and acquired the membership of the CICPA, Xiang stated. ????

In Xiang's opinion, China's accession to the WTO at the end of 2001 marked a new historic era for its opening-up to the outside world in that China will implement its WTO commitments and open ever wider its accounting market to the outside world.

The CICPA had grouped a total of 130,000 members by the end of 2001, of which more than 70,000 are non-practicing members and 50,000 practicing members in over 4,300 accounting firms.

Xiang pointed out that the CPA has become the most attractive profession, which draws more than 600,000 candidates to register for the unified national qualification examination for the CPAs every year.

Since the occurrence of the Enron and WorldCom incidents, said the finance minister, the credibility and independence of accounting service are called into question. To restore the public confidence and meet the challenges brought about by the development of the knowledge-based economy and globalization, it is necessary for the international accounting community to conduct vigorous reform and innovation, he concluded.

In the end, Xiang put forward proposals for strengthening cooperation at global level in the field of accounting service, creating greater harmony in accounting and auditing standards, improving the independence of the CPAs, enhancing supervision and monitoring of accounting service, and reinforcing corporate governance.

The 16th World Congress of Accountants, the first ever held in Hong Kong from Nov. 19 to Nov. 21, has attracted 5,000 accounting professionals from approximately 100 countries and regions.

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