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第四章比较会计:美洲和亚洲讨论问题1。公共和私营部门机构参与调节和执行财务报告在美国。财务会计准则委员会是一个私人的身体决定美国公认会计原则。美国证券交易委员会有权决定美国公认会计准则对上市公司来说,但FASB推迟。FASB和秒有一个密切的工作关系,确保FASB SEC标准是可以接受的。美国证券交易委员会对上市公司实施财务报告规则。公司积极审查申请。审计师的执法者非公有制企业举行。发布的会计准则在墨西哥是财务信息标准的研究和发展委员会(CINIF),一个独立的美国FASB公私部门的身体后图案。墨西哥的权威发布会计准则是国家银行和证券委员会认可的政府机构,调节墨西哥证券交易所。欧盟委员会负责执行上市公司财务报告准则。然而,目前尚不清楚如何主动的委员会在调查其接收到的文件。执行财务报告为非上市公司有效取决于审计师。日本会计准则由私营部门机构设置,日本的会计准则委员会。ASBJ的建立是最近在日本发展。以前,会计准则制定是政府活动。财务报告的执行有效取决于审计师。证券交易所监管的金融服务机构,政府机构。然而,目前尚不清楚如何主动FSA在监测由日本公司财务报告。在中国会计准则制定是政府的活动。中国会计准则委员会权威机构在财政部负责制定会计准则。中国证券监督管理委员会是中国的政府机构监管的两个股票交易所。中国证监会还负责执行上市公司财务报告。许多中国执行机制的有效性问题。印度特许会计师协会,一个私营部门的专业机构,在印度发展会计准则。印度证券交易委员会财政部的一个机构,调节印度22证券交易所和负责执行财务报告规则。然而,目前尚不清楚如何主动的董事会是由印度公司在监督财务报告。总的来说,五个国家不同的私人和公共部门负责管理和执行财务报告。在若干国家执法是可疑的。美国最强大的机制来调节和执行五个国家的财务报告。2。美国和印度是普通法国家,面向公允表达的财务报告。墨西哥也有面向公允表达的财务报告,因为美国的影响力。此外,墨西哥通货膨胀会计,与其他四个国家。日本是一个代码法律的国家,其会计历来保守和与特征,就像其他代码法系国家(如法国和德国第三章中讨论)。然而,它正在公允表达,因为它致力于日本会计准则与国际财务报告准则趋同。中国同样是朝着面向公允表达的中国公认会计准则会计采用国际财务报告准则。尽管采用公允表达原则,一个人可以质疑中国实现应用程序。有一个严重缺乏训练有素的会计师在中国和行业仍未开发。会计职业强在其他四个国家,包括印度和墨西哥的“发展中”国家。3。本章讨论的审计监督机构:答:美国公共公司会计监督委员会b .日本注册会计师和审计监督委员会最近成立的独立审计师监管机构在美国和日本是由于最近全球会计丑闻。都代表收紧控制审计。4。税收立法支付有限的作用在所有五个国家,除了日本。在美国,除了后进先出财务和税务会计是独立的。税收立法对财务报告实践在墨西哥几乎没有影响。例如,财务和税务会计之间有很多差异,比如销售成本的计算,折旧和摊销商誉。税收立法历来的一面“三角法律制度”在日本,日本会计准则施加影响。然而,税收下降的影响与IFRS日本会计标准的一致性。几年前,在中国税收立法有一些影响,但这已经减弱为中国发展一个更完整的财务报告准则。印度,像其他普通法国家,将财务和税务会计.5这个问题一直是学术界的兴趣持续很长一段时间。会计专业知识是经济发展的必要前提,或者一个经济的进步没有?看起来,经济不能走的太远,没有会计专业知识。但可能是双向的关系,就像供给创造需求,反之亦然。中国的例子展示了发展中会计的重要性(标准、知识等)。会计是一个在中国市场改革计划的一部分,所以需要从一开始就已经认出了。墨西哥和印度一直以市场为导向的超过中国,和他们的会计更发达。但是,很明显,这两个国家会计支持经济发展。 6。英国标准(第3章)和IFRS(第八章),以反映以原则为基础的标准,美国标准(本章)是基于规则的。一般来说,以原则为基础的标准制定总体目标和基本面和需要专业判断实施。他们更灵活的基于规则的标准和在实践中可能会导致更多的分歧。基于规则的标准更为具体的要求和详细的实施指导比以原则为基础的标准。可能导致更多的可比性不是以原则为基础的标准,但据说培养“复选框”的心态。章说,美国公认会计准则“可能比世界其他国家的总和还多,比其他任何国家更详细。“因此,我们可以认为,美国公认会计准则是基于规则的7。英国和美国都遵循会计公允表达,反映经济实质而不是法律形式。英国“真实而公平”和美国“礼物相当“反映公允表达。然而,英国有一个真正的和公平的覆盖会计准则可以覆盖在必要时达到一个真正的和公平的视图。在美国,提出了相当意味着遵循公认会计原则8。最重要的(即协调项目。,墨西哥和美国会计最重要区别)与一般物价水平会计在墨西哥的使用。严格的使用历史成本在美国一章中提到的另外两个差异(一)墨西哥应用权益法为10%,而美国适用20%和(b)在墨西哥开发费用资本化和摊销后技术建立了可行性;在美国,他们被转移。 a. 9。日本泡沫经济的破灭在1990年代促使日本财务报告的审查标准。很明显,许多会计实践实际上藏严重许多日本企业是如何做的。会计“大爆炸”旨在使日本公司的财务状况更加透明,使日本会计更符合国际惯例。b. 实践的变化包括以下:c. 答:要求上市公司报告现金流量表。d. b .子公司合并基于控制而不是所有权。e. c .附属企业使用权益法核算基于影响而不是所有权。f. d .证券投资价值的市场,而不是成本。g. e .递延税是完全提供。h. f .养老金和其他退休义务应计。i.j. 9。全面、完整的信息披露可靠、公平的信息有必要开发一个公平和有效的股票市场。会计的“盎格鲁-撒克逊”模式(第2章中讨论),强调公平的财务状况和结果,强调管理,也促进公平和有效的股票市场的发展。这个会计方向的国家(如美国和英国)活跃,公平和有效率的股票市场。还有一个法律结构和有效的执行法律和会计披露所有的工作。k. 中国正在发展会计准则与股票市场取向上面所讨论的。所以中国是正确的标准本身将支持股市的发展。此外,投资者必须有信心,标准被跟踪,即。,信息传播公司是可靠的。因此,良好的审计由训练有素的会计专业很重要。中国可能有困难发展中会计职业,进而成为阻碍证券市场的发展。中国还必须克服共产主义下的保密文化发达。a. 9。本章提到的一些例子,中国会计标准与世界一流的实践是一致的。选择性列表,更重要的是以下几点:b. 答:比较合并财务报表,包括资产负债表,损益表,现金流量表,笔记。c. b .权责发生制识别收入与费用、匹配和一致性。d. c .采购业务组合年度减值测试方法。e. d . nonconsolidated子公司的权益法。f. e .使用历史成本。g. f .融资租赁大写。h. 12。英国在印度对会计的影响是显而易见的。印度的普通法法律制度和公平的陈述会计随之而来。像英国,财务报表必须给一个真正的和公平的视图和有一个强大的自动调整的会计行业。专业会计师(审计师)被称为注册会计师在这两个国家。本章中所描述的财务报告和会计测量对印度非常类似于第三章中描述的英国。a. 练习b. 1。美国c. 财务会计准则委员会。d. 证券交易委员会。e. 墨西哥f. 答:理事会财务信息标准的研究和开发。g. 没有明确的执行机构。然而,国家银行和证券委员会调节墨西哥证券交易所。h. 日本i. 日本会计准则理事会。j. b .金融服务机构对上市公司在证券法律和司法部,当涉及到公司法。k. 中国l. 答:中国财政部会计准则委员会。m. b .中国注册会计师协会根据财政部、管辖调节审计。n. 印度o. 印度特许会计师协会。p. 印度特许会计师协会。q.2。在撰写本文时,下面的组织与IFAC的网站:美国管理会计师协会美国注册会计师协会会计协会的董事会墨西哥Instituto Mexicano德康塔葡萄牙日报日本日本注册会计师协会中国中国注册会计师协会 2。五个表达式的问题、术语或短语不熟悉或不寻常的学生的祖国。以美国为祖国,这里是十二:A .三角法律系统的描述会计监管在日本公司法组成的相互作用,证券交易法律,企业所得税法。b .社会主义市场经济,在中国使用来描述其计划经济与市场适应性。c .土地和工业产权,仍属于中国政府,私人公司获得使用这些工业资产的权利。d .比索的目前的购买力一个术语来描述一般物价水平会计在墨西哥。e .税务合规审计报告墨西哥审计师必须证明没有违规行为观察关于遵守税法。财务状况变动表-墨西哥的财务报表相对应的现金流量表。然而,财务状况变动表是准备在不断比索(通胀调整后的),而现金流量表使用历史成本。g .资历溢价在墨西哥赔偿终止就业基于员工工作多长时间。在日本h集团公司连锁巨头企业。即“关系”文化在中国的关系,基于相互关系和相互职责。jb股,外国投资者在中国上市公司股票。k .真正的和公平的观点印度的需求,财务报表存在一个真正的和公平的观点来自英国。l .融合在印度使用的术语合并。4。最重要的财务会计实践或原则与国际准则差异可能是以下几点:美国后进先出。由于税法考虑,没有其他国家使用后进先出后进先出在美国发现的程度降低公布业绩。因为年龄的增长,降低库存成本是显示在资产负债表上,债务资产比率会更高。公司使用后进先出必须报告所谓后进先出储备,使分析师将后进先出相当于FIFO。墨西哥通货膨胀调整。世界上大多数国家资产价值在历史成本和相关费用;一些国家将通货膨胀调整。通货膨胀调整,收益将较低,可能会降低资产负债率。不太可能分析师将能够调整墨西哥账户历史成本。当然,这种调整是不明智的,因为高通胀。日本利益池方法业务组合,没有一个政党获得控制。国际标准对所有业务组合作为一个购买。购买会计相比,池导致更高的收入和更低的资产价值。因此,债务资产比率会更高。分析师将无法调整会计方法。中国显示土地使用权和工业产权归政府作为无形资产。中国在多大程度上是很不寻常的政府拥有土地和工业产权。只要这些无形资产相当重视,将没有影响公布财报收益或资产负债比。然而,分析师必须意识到无形资产在中国公司的资产负债表是有形资产的资产负债表上来自其他国家的公司。印度池的利益(合并)融合的方法。如上所述,日本,国际标准是对所有业务组合购买。购买会计相比,池导致更高的收入和更低的资产价值。因此,债务资产比率会更高。分析师将无法调整会计方法。5. At the time of writing, the following numbers are reported by the World Federation of Stock Exchanges:CountryNo. of domestic listed firmsNo. of foreign listed firmsUnited States: American SE Nasdaq NYSE4952,8321,818100332452Mexico150176Japan: Osaka Tokyo1,0632,323128China: Shanghai SE Shenzhen SE83354400India: Bombay National4,7631,03400The significant number of listed companies in India may be surprising. It may also be surprising that the number of listed Japanese companies matches the numbers for the United States. Another potential surprise is the fact that the Mexican Stock Exchange has more foreign listed firms than domestic listed firms. Students will probably speculate that most of the foreign listed firms in Mexico are from other Latin American countries, a statement that is in fact true. The lack of foreign listed firms in China and India has two possible explanations either the government does not allow foreign firms to list on domestic exchanges, or companies do not see these stock markets as an attractive place to raise capital. The latter explanation is why there are so few foreign listed firms in Japan.3. A comparison of the countries in Exhibit 4-5 reveals few differences among the United States, Mexico, and China. Thus, all three countries can claim that their GAAP are comparably oriented toward equity investors. However, of the three countries, the United States can probably claim to have GAAP most oriented toward equity investors. The chapter notes that the U.S. has the most voluminous and detailed accounting requirements in the world and that they are rigorously enforced. Thus, the nod goes to the United States.India and Japan both allow pooling of interests accounting, an accounting treatment now at variance with international norms. The treatment of goodwill in these two countries is also at variance with international norms. In addition, Japans lease accounting treatment is at variance with international norms. Thus, Japan seems to be the country whose GAAP is least oriented toward equity investors. 4. At the time of writing, the following companies are listed on the New York Stock Exchange from Mexico, Japan, India, and China:MexicoAmerica MovilCemex Coca-Cola FEMSADesarrolladora Homex Empresas ICA Fomento Economico MexicanoGRUMAGrupo Aeroportuario del PacificoGrupo Aeroportuario del SuresteGrupo Casa SabaGrupo Radio CentroGrupo TelevisaGrupo TMMIndustrias BachocoTelefonos de MexicoVitroJapanAdvantestCannonHitachiHonda Motor KonamiKubota KyoceraMatsushita Electric IndustrialMitsubishi UFJ Financial GroupMizuho Financial GroupNidec Nippon Telegraph and TelephoneNIS Group Co.Nomura HoldingsNTT DoCoMoOrix Sony TDK Toyota MotorIndiaDr. Reddys LaboratoriesHDFC BankICICI BankMahanagar Telephone NigamPatni Computer SystemsSatyam Computer ServicesTata MotorsVidesh Sanchar NigamWiproWNS HoldingsChinaAluminum Corporation of ChinaAmerican Oriental Bioengineering China Eastern Airlines China Life InsuranceChina MobileChina Netcom GroupChina Petroleum and ChemicalChina Southern AirlinesChina TelecomChina UnicomGuangshen RailwayHuaneng Power InternationalMindray Medical InternationalNew Oriental Education and TechnologyPetroChina Semiconductor Manufacturing InternationalSinopec Shanghai PetrochemicalSuntech Power HoldingsTrina SolarYanzhou Coal Mining Mexico has 16 companies listed on the NYSE, ranking third after Brazil (35) and Chile (17). This is perhaps surprising given the strong economic links between the United States and Mexico discussed in the chapter. One would expect Mexico to have the most of any Latin American country. Of the countries in the Asia-Pacific region, China has the most number of companies listed on the NYSE (20); Japan is second (19); and India is third (10). As discussed in the chapter, the economies of China and India are growing rapidly. The relatively large numbers of NYSE listed Chinese and Indian companies probably reflect a need for capital by their larger companies. That Japan has approximately the same number of NYSE listed companies as China is perhaps surprising. However, the chapter discusses how debt financing dominates equity financing in Japan.8.a.The two major areas of difference are asset valuation and accounting for goodwill. In the U.K., assets may be valued at historical cost, current cost, or a mixture of the two. When fixed assets are revalued, depreciation and amortization must be calculated using the revalued amounts. Only historical cost is allowed in the U.S. In the U.K., goodwill can be impairments tested, as in the U.S., but may also be amortized over 20 years or less. Other differences between U.K. and U.S. GAAP relate to LIFO and the calculation of long-term deferred taxes. LIFO is rarely used in the U.K., but is relatively more common in the U.S. In the U.K., long-term deferred taxes may be valued at discounted present value. Finally, opportunities for income smoothing are probably greater in the U.K. than in the U.S. b. Research has documented that U.S. GAAP earnings is systematically more conservative than U.K. GAAP earnings (see, for example, P. Weetman and S.J. Gray, International Financial Analysis and Comparative Corporate Performance: The Impact of U.K. versus U.S. Accounting Principles on Earnings, Journal of International Financial Management and Accounting (Summer & Autumn 1990), pp. 111-130). However, many of the accounting principles on which this research study is based have now changed. Goodwill accounting should result in a more conservative income amount for U.K. companies if they systematically amortize it over 20 years. However, the occasional impairments write-downs that U.S. companies will have will result in a lower income amount in the year of write-down. The use of LIFO in the U.S. will result in more conservatively measured U.S. income amount. However, U.K. companies will report lower earnings if assets are revalued, because corresponding depreciation charges will be higher. The effects of U8。答:差异的两个主要领域是商誉的资产评估和会计。在英国、资产价值历史成本,目前的成本,或两种的混合物。当固定资产重估、折旧及摊销必须使用重估金额计算。只允许历史成本在美国在英国,商誉减值测试,在美国,但也可能是摊销超过20年或更少。其他英国和美国公认会计准则之间的差异与后进先出和长期递延税款的计算。在英国很少使用后进先出,但在英国相对更常见的在美国长期递延税可能价值贴现现值。最后,收入平滑的机会可能是在英国比在美国b .的研究已经证明,美国公认会计准则收入比英国公认会计准则收入系统更为保守(见,例如,p . Weetman S.J.灰色,国际金融公司业绩分析和比较:英国与美国会计准则的影响收入,国际财务管理与会计(1990年夏季和秋季),页111 - 130)。然而,很多这个研究是基于会计准则已经改变了。商誉会计应该导致一个更保守的英国企业的收入金额如果他们系统摊销超过20年。然而,偶尔障碍减记,美国公司将会导致较低的收入金额减记。使用后进先出在美国将导致更保守的美国收入金额来衡量。然而,英国公司将报告收入降低如果资产升值,因为相应的折旧费用会更高。英国平滑活动的影响尚不清楚,但似乎公司更倾向于顺利走向更高的收益,而不是更低。总的来说,我们认为,美国公司将会更加保守的盈利数额,但U。K和美国公认会计准则趋同。.K. smoothing activities are unclear, but it seems likely that companies would be more inclined to smooth toward higher earnings rather than lower. On balance, we think that U.S. companies will have somewhat more conservative earnings amounts, but U.K and U.S. GAAP are converging.9.答:大公司必须准备合并财务报表,而不仅仅是列出的。b .上市公司必须报告现金流量表。整合是基于控制而不是所有权。d .使用权益法是基于重大影响,而不是所有权。e .商誉计算净资产公允市场价值的基础上获得的,而不是账面价值。f .商誉摊销超过20年,而不是五年。这也是减值测试。g .证券投资价值公允市场价值,而不是成本。h .存货按较低的成本或净变现价值,而不是成本。即递延税现在完全提供。j .退休养老金和其他义务现在完全积累。k .目前研究和开发费用化,而不是延迟在某些情况下。收入与费用的l .外币翻译现在翻译的平均速度(而不是选择年终或平均汇率)和股东权益的翻译调整(而不是显示为一个资产或负债)。10. The chapter identifies the following major changes that have occurred in Chinese accounting since the 1990s:a. The ASBE issued in 2006 represent a comprehensive set of Chinese accounting standards that are substantially in line with IFRS.b. The ASBE issued in 2006 also contains auditing standards similar to International Standards on Auditing. All Chinese accounting firms and auditors are required to follow these audit standards.c. A cash flow statement is now required.d. Goodwill is impairments tested rather than amortized.e. Use of the equity method is based on influence rather than ownership percentage.f. Consolidation of subsidiary companies is based on control rather than ownership percentage.g. Foreign currency translation of overseas subsidiaries is based on the primary economic environment in which they operate.h. Tangible assets are depreciated over their expected useful lives rather than based on tax law.i. Lower of cost or market is now used to value inventory.j. LIFO is no longer an acceptable inventory costing method.k. Finance leases are now capitalized.l. Deferred taxes are now provided in full for all temporary differences.m. Contingent obligations are now provided for when they are both probable and a reliable estimate can be made of their amount.11.Accounting professionUsers/PreparersOrganized LaborTax AuthoritiesCommercial LawSecurities CommissionsStock MarketUnited StatesYesYesNoNoNoYesYesMexicoYesYesNoNoNoNoNoJapanYesYesNoYes (some)YesYesNoChinaNoNoNoNoYesYesNoIndiaYesYesNoNoYesNoNo 12。答:日本和印度允许池,而其他人没有。池通常导致较低的非流动资产数量和更高的收入。善意和随后的摊销也排除在池。在某种程度上,池被日本和印度公司,他们可能会有更高的债务股本和债务资产比率。分子(返回)和分母(产权)两个盈利能力比率应该更高,但对比例的影响仍不确定。流动比率应不受影响。b .日本和印度都需要大写的商誉摊销。这应该不会影响流动比率。摊销将导致较低的收入将留存收益。因此,债务/股本比例将高于没有摊销。债务资产比率也将更高。对盈利能力比率的影响尚不清楚。分子(收入)将低于没有摊销。然而每种情况的分母(资产和股票)也将更低。c使用权益法在所有五个国家,所以没有影响比较比率。d .价格水平调整会计实践在墨西哥和印度公司可能重估其有形资产的当前值。结果是更高的资产价值,更高的股票,和更低的收入(因为更高的折旧和销货成本费用),与历史成本相比。当前的比例会更高,但现金流流动负债业务不会受到影响。偿债能力比率会降低,因为他们的分母(资产和股票)会更高。盈利能力比率会降低。分子(收入)将降低,而分母(产权)将更高。在日本e .折旧是税收,这是通常高于基于经济学折旧。这将减少收入和降低盈利能力比率。固定资产的快速注销将导致较低的总资产价值。因此,债务资产比率应该更高。负债与股东权益比率,流动比率应不受影响。f .在美国使用后进先出。在日本这是允许的,但不能广泛使用。公司使用后进先出应该收入较低,所以降低盈利能力比率。库存可能会降低,导致债务资产比率增加,流动比率减少。流动负债现金流将不受影响。用更少的收入将留存收益,债务/股本比例会更高。g .可能的损失应计在所有五个国家,所以没有影响比较比率。h .并非所有的金融租赁在日本是大写。公司将报告相对较低的非流动负债和非流动资产。收入也会受到影响,但可能是无形的。流动比率应不受影响。偿债能力比率应该降低和资产回报率会更高。对净资产收益率的影响可能是无形的。即递延税应计在所有五个国家,所以没有影响比较比率。j .一些收入平滑的机会存在于印度。收入平滑有不确定的影响在任何给定的收入。因此它是不可能知道盈利能力比率的影响。创建储备的影响是改变数量,否则在留存收益准备金账户。因为这两个是在股东权益,这总不受影响。因此,偿债能力比率很可能不受影响。这两个流动性比率将不受影响。Case 4-1Standing On Principles1。以原则为基础的标准制定总体目标和基本面和需要专业判断实施。他们更灵活的基于规则的标准。基于规则的标准更为具体的要求和详细的实施指导比以原则为基础的标准。许多会计师认为,基于规则的标准比以原则为基础的标准导致更多类似的财务报告。然而,其他会计师认为恰恰相反。他们声称,基于规则的标准导致更严格的和一致的应用程序标准的意图,因为一个定义良好的原则允许少数例外和“亮线。”还说,基于规则的标准侵蚀编制和审计人员,因为他们的专业培养“复选框”的心态在会计师。根据以原则为基础的标准,编制和审计人员退一步,必须考虑会计是否真的公平的公司的运营和财务状况。也表明,基于规则的标准允许金融和会计工程结构交易“周围”规则,从而绕过的意图和精神的标准。以原则为基础的标准将提高全球会计准则的趋同的可能性。标准制定者可以来协议原则比他们可以更快的详细规则。2.The main reason why U.S. GAAP has evolved into a rules-based approach is the litigiousness of U.S. society. Following detailed rules is easier to defend in court than professional judgment. U.S. preparers and auditors demand details in order to defend themselves against lawsuits. Another reason is the standard setting process in the United States. Compromises are inevitable to balance the need for decision-useful information with the practical concerns of the FASBs constituents. Thus, exceptions are often written into standards. As discussed next, the legalistic environment found in the U.S. would have to change to make principles-based standards effective there.3.To make principles-based standards effective in the U.S., there would need to be a change in ethos not only among preparers and auditors, but also among regulators and users of financial statements. A principles-based approach requires a strong commitment from preparers that their financial statements are a faithful representation of all transactions. It also requires a strong commitment from auditors to resist client pressures. Both groups would need to exercise greater professional judgment than they do now. Regulators and users of financial statements would have to learn to be tolerant of the consequences of applying professional judgment, including possible greater diversity in practice. If lawyers and regulators continually second guess honest judgments made by preparers and auditors, the demand for rules will arise. Finally, the litigious nature of U.S. society would need to change, including the system of laws.2. In your authors opinion, there is no unequivocal answer to whether investors and analysts are better served by rules-based or principles-based accounting standards. There are advantages and disadvantages to each approach. The nature of society, including how the legal system settles disputes, impacts the effectiveness of either approach. Until recently, the U.S. seemed to be reasonably well served with a rules-based approach. As noted above, moving to principles-based accounting standards would require substantial change in ethos in the U.S. While principles-based standards may be less complex than rules-based standards, the fact is that the modern economy is full of complex transactions. Accounting standards reflect this reality.Case 4-2Casino Capital1. The conditions necessary to develop a stock market in an emerging economy include the following:a. Accounting that emphasizes fair presentation.b. Full and complete disclosure of reliable, evenhanded information about companies operations and financial condition.c. Competent, well-trained professional accountants both in industry and the auditing profession.d. Investor confidence that reporting and disclosure requirements are being followed and financial reporting is relevant and reliable.e. Legal structure and effective enforcement of laws and accounting disclosures.f. Good corporate governance, including effective monitoring and oversight of management.g. Sufficient wealth among the population to engage in stock market activity. In general, the stock market should be seen as a way to save instead of just making a quick profit from trading.h. Prohibition of insider trading.2. As discussed in the chapter, China has adopted accounting standards consistent with IFRS. In other words, Chinas standards are focused on fair presentation. However, from the chapter and the case it is clear that few of the other conditions enumerated above are present in China. The case says that balance sheets of Chinese companies are a “joke,” that “numbers are whatever the key man wants them to be,” and that levels of disclosure are “poor.” A 2002 survey revealed that 10 percent of listed Chinese companies “doctored” their books. The chapter discusses the current shortage of well-trained Chinese accountants. If trading is driven “almost entirely on rumor,” it is difficult to believe that investors have much confidence in the quality of financial reporting by Chinese companies. The legal infrastructure is not yet fully developed and the enforcement of accounting and other standards is weak. The case also mentions weak corporate governance and the lack of qualified independent directors to chair audit committees. It also states that investors are concerned with “trading not ownership.” Finally, the case states that “insider trading is still rife on a heroic scale.” 3. Until the problems listed above and in the case are solved, China will not develop a stock market with fair trading.4. Reforms include resolving the problems noted above. Students can be expected to concentrate on accounting training, accounting standard setting, and rules, laws, an
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