Chinese vs. International Accounting Standards
Who: A Sino-American service company with operations in North China.
Background: During the monthly review of the financial statements, the foreign partner, who was not familiar with some Chinese accounting principles, could not understand the financial statements prepared by the Chinese accounting team. It suspected a mistake had been made during the recording process.
Objective: To verify that the set of financial statements were accurately prepared, in order to ensure relevance, reliability, comparability and consistency.
Dezan Shira & Associates Approach
Dezan Shira & Associates´ expert team uncovered that the financial statements weren't prepared in accordance to International Financial Reporting Standards (IFRS) but Instead followed Chinese Accounting Standards (CAS). This difference in preparation of financial statements was leading to misunderstandings and problems between the Chinese and foreign parties.
- Our accounting team reconciled the financial statements for the client in accordance to IFRS and performed a financial review of the same set of statements to ensure they were accurately prepared.
- The reconciliation ensured that the foreign partner was able to understand and interpret the financial position and performance of the company and make operational decisions clearly and efficiently.
- Financially reviewing the report ensured that the local Chinese consultant had prepared the financial statements accurately.
- Finally, the client’s internal accounting office could exploit this opportunity to gain expertise and knowledge from Dezan Shira’s reconciliation work and advice.