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Listed Firms Urged to Improve Information Disclosure
China's stock market regulator is urging domestic firms to raise the standard of information disclosure by adopting more international accounting principles, in a move to guard against possible risks.
The China Securities Regulatory Commission issued a notice calling for firms listed on domestic stock exchanges to improve their accounting system.
In the notice, the commission introduced the concept of " exceptional items," which are currently not so familiar with domestic firms and are sometimes misunderstood.
A spokesman with the commission explains that exceptional items refer to gains or losses arising from related party transactions which were conducted significantly different from fair value; or gains or losses arising from the disposal of subsidiaries and other equity investment, asset swaps, or gains or losses arising from tax rebates, exemption, or subsidy from approval without proper authority.
They may also include gains or losses arising from surplus or deficit identified from physical count, charges for the use of capital, and non-operating income expenses.
The spokesman said that listed firms should give a full explanation of exceptional items in their prospectus, quarterly reports and application files. The finance report must be examined by certified public accountants to ensure its authenticity.
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