Setting accounting standards for business enterprises: Convergence, innovation and perspective in China

The development of new Chinese Accounting Standards for Business Enterprises ("ASBEs") is an important step for the development of the Chinese economy and its place in the world's increasingly integrated capital markets. They cover the recognition, measurements, presentation and disclosure of most transactions and events and financial reporting. There is some innovation in the new Accounting Standards, such as the most significant change is the requirement of fair value measurement in some standards. This paper reviews some junctures and innovation of the process of establishing accounting principle in U.S.A. Then it will introduce the main features and, innovation of the ASBEs, analyse the challenges in the adoption of the new standards. By comparing them with IFRS, this paper will show that ASBEs do not simply expand the disclosure requirements, for they make great innovation to current Generally Accepted Accounting Practice in Chinese Mainland ("PRC GAAP"). Lastly this paper will forecast the impact and future development of applying the ASBEs, we also believe that, the application of the ASBEs will be expanded gradually in all large and medium sized enterprises based on the implementation results and eventually.