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Outlines economic and accounting reforms in China since the late 1970s and assesses the impact of the 1997 Asian financial crisis on them. Suggests that although China escaped the recession suffered by neighbouring countries, it still has a high risk of financial crisis/recession and enumerates the reasons why. Explains the steps taken by the government to reduce the risk, including reforms aimed at the standardization of accounting practices and improved reliability and comparability of financial information. Discusses the nine practical accounting standards issued between May 1997 and July 1999, which are in line with international standards and summarizes the reforms to enhance the independent status of public practitioners and the auditing standards issued so far. Identifies six remaining problems in the process of accounting reform but believes it is on the right track.

Forces of globalization have driven international convergence in corporate governance and accounting considerably over the past few decades. Nevertheless, despite the global trend, convergence of corporate governance and financial reporting remains a subject of debate. This research monograph critically examines whether China’s convergence with Anglo-American corporate governance principles and the International Financial Reporting Standards (IFRS) is likely to produce the expected outcomes of improving the transparency and comparability of accounting information in Chinese firms. In this chapter, we discuss the motivation for and the significance of the study; describe the issues associated with the adoption of internationally acceptable standards and principles in China; explain the theoretical framework used to inform the study and research methodology; and present the aim and objectives of the monograph.

China is conducting an open market policy and Chinese firms are seeking independent audit services. As a result, the Chinese accounting profession is expanding at a tremendous speed, and has played an important role in economic reform. However, Chinese auditing operates in a very different environment from those experienced in Western countries. Consequently, there is considerable concern about auditor independence in China. The purpose of this paper is to examine some reasons for a lack of independence in the Chinese audit profession. We critically review empirical evidence regarding auditor practice in China. We then make some suggestions that might improve auditor independence.

The purpose of this paper is to investigate the perceptions of the roles, responsibilities and basic characteristics of audit committees (ACs) in the current business environment in China, from the perspectives of investors/creditors, independent directors (AC members), company officers and auditors.

The study is conducted through a questionnaire survey of the four groups of stakeholders with two forms of survey instruments being distributed to randomly selected survey subjects. The data collected from the returned questionnaires are analyzed at both the aggregate and sub‐sample levels.

The study finds that various groups of stakeholders have generally accepted the ceremonial roles and responsibilities of ACs in terms of lifting the image of good corporate governance, enhancing communication between board of directors (BoD) and auditors, and mediating conflict between management and auditors. However, the more concrete AC oversight roles and responsibilities for improving internal control, rules compliance, sound corporate financial reporting and auditing processes have not been fully recognized at present, particularly by company management and independent directors. In addition, the study reveals that actual AC operations in practice are ineffective even though a large portion of Chinese listed companies have set up ACs.

The paper should assist readers to understand the recent development of corporate governance and stock market reforms in China and generate some policy implications that can be applied to other countries as well, emerging economies in particular.

The main objective of this paper is to examine the development of public accounting in China. While a brief review of the historical evolution of Chinese public accounting is presented in the first section, the paper focuses on the major progress of internationalization of public accounting in China in the most recent years, that is, improving qualification standards for professional accountants; unifying the professional associations of public practitioners; establishing Chinese Independent Auditing Standards; enforcing professional ethics and continuous education programs; reforming the administration of CPA firms; and opening the domestic accounting market up to foreign professionals. Both the motivation and impedance to those developments are analyzed. It is concluded that, to date, the gap between Chinese public accounting and the practices in the rest of the world has been narrowed down remarkably, which will benefit both Chinese and international business communities.

This paper presents a comparative study of the financial reporting practices of three Chinese companies listed simultaneously in Mainland China (A‐shares) and Hong Kong (H‐shares). Their financial statements, prepared based on the accounting and disclosure regulations in China and Hong Kong (or International Accounting Standards, IASs) over the period of 1995‐1998 were studied, including an examination of their corporate structures, and vertical and horizontal comparisons of their primary accounting numbers and key financial ratios. This study demonstrates that significant discrepancies exist for financial information disclosed in terms of Chinese GAAP, Hong Kong GAAP or IASs. In addition, there are notable deviations in financial disclosures among the three companies. The study findings confirm the existence of a substantial gap between the Chinese practices of corporate accounting and financial reporting and the internationally accepted norms. It is suggested that there is an urgent need to promote internationalization of Chinese accounting and improve the understandability and comparability of financial statements released by Chinese listed companies in order to enhance their relevance and usefulness for decision‐making by domestic and overseas investors.

This paper uses content analysis to compare International Financial Reporting Standards (IFRS)1 with the Local Accounting Standards (LAS) of South Africa (SA), Mauritius and Tanzania. It begins by identifying the equivalence of the local accounting standards of these three countries with IFRS and follows with a content analysis of the definition of terms, accounting treatment and disclosure requirements in the standards. The contents of these three items in each of these countries’ standards are compared with those in the IFRS. A score card is used to record the level of harmony between the LAS and IFRS of each country and between the LAS of each country. The score is compared by running statistical test of significant difference using Wilcoxon Matched Paired test. The paper reports that, except for Tanzania, the local accounting standards of the two other countries are more or less similar to IFRS. As regards the level of harmony between the local accounting standards and IFRS, the score card reveals that the accounting standards of SA are more in harmony with IFRS, followed by Mauritius. A lead table is produced at the end.

This study distinctively explores the firm-level and national-level determinants of audit committee effectiveness (ACE) in the Libyan banking sector (LBS).

A mixed-methods approach has been employed to enhance the quality of the collected data and reduce the risk of bias. Five groups of actors in the Libyan banking sector were surveyed, including board members, AC members, executive managers, internal auditors and external auditors, further to interviewing a representative sample of these groups. In total, 218 survey responses were gathered, and 20 semi-structured interviews were conducted.

The study results show that AC authority, financial expertise and diligence are positively and significantly attributed to ACE, although AC independence and resources are not significantly related to ACE. The authors find that the legal and regulatory environment, government intervention, and the accounting and auditing environment are perceived as important and associated with ACE regarding national-level factors. These findings are strongly supported by semi-structured interviews and suggest that both firm-level and national-level factors are essential in understanding ACE in Libya's banking sector.

The study’s evidence reiterates the vital need for more concentrated work to integrate governance, legislative and regulatory reforms to ensure the effectiveness of ACs as a key corporate governance (CG) mechanism in developing economies.

This study extends the literature relating measures of AC inputs and outputs by examining the perception of stakeholders to understand both the firm-level and national-level factors that affect ACE in a single institutional setting. Additionally, this work adds to the limited number of recent studies examining the role of ACs in the banking sector in developing economies.

This paper aims to examine differential perceptions of lenders and investors on (1) the use, perceived usefulness, importance and adequacy of annual reports, (2) the importance of qualitative characteristics (QCs) and (3) the perceived impact of International Financial Reporting Standards (IFRS) on financial reporting quality (FRQ) in Sri Lanka.

A questionnaire survey study of practising professionals consisting of Sri Lankan investors (N = 214) and lenders (N = 235).

In relation to (1), lenders and investors rank three out of ten information sources ahead of the remaining seven: both include annual reports and personal knowledge. However, the highest average response for lenders is direct communication with clients, and for investors, it is stock market publications. Within annual reports, both decision-makers identify financial statements as the most useful part. Concerning (2), they both identified understandability as the most important QC followed by timeliness. Relevance ranked last, surprisingly. In relation to (3), both groups perceived that the new IFRS reporting environment improved the FRQ compared to the previous Sri Lanka Accounting Standards regime.

Ranking understandability as the most important QC in terms of decision usefulness contradicts IASB's categorisation. The authors provide empirical data on the perceived degree of success of adopting IFRS in a developing economy.

The authors design a decision-oriented (lending vs investing) and context-specific (IASB's financial reporting framework) questionnaire to examine the perceptions of key capital providers separately on the issues mentioned above in “Purpose” within a developing economy. The survey fits into two aspects of the decision-useful theory: useful to make what decisions and useful to whom.