November 24, 2015
By Michael Cohn
The International Financial Reporting Standards Foundation, which oversees the International Accounting Standards Board, is forming a joint working group with the Chinese Ministry of Finance to explore ways to advance the use of IFRS within China, especially for internationally oriented Chinese companies.
The announcement forms part of a comprehensive update to the 2005 Beijing Joint Statement, which has served as the basis for a decade of cooperation between the International Accounting Standards Board and Chinese authorities, and led to Chinese Accounting Standards becoming substantially converged with IFRS Standards.
Building on the success of the 2005 statement, the 2015 Joint Statement establishes a joint working group to explore steps and ways to advance the use of IFRS within China, especially for internationally-oriented Chinese companies; identifies the vision of Chinese Accounting Standards becoming fully converged with IFRS Standards, which is consistent with the G20-endorsed objective of a single set of high quality, global accounting standards; and encourages continued co-operation between the IASB and Chinese stakeholders in the future development of IFRS Standards.
In contrast, the Financial Accounting Standards in the U.S. and the IASB signed the so-called Norwalk Agreement in September 2002, a memorandum of understanding that served as the basis for over a decade of work converging IFRS and U.S. GAAP, and they reaffirmed the commitment in 2006. Last year. FASB and the IASB released a mostly converged revenue recognition standard, but the two boards continue to differ in some key aspects of the leasing standard they plan to introduce early next year, as well as the financial instruments standard that the IASB has already released.