Intent Declared Summary

According to the Deloitte IAS Plus website (November 2005 update), the Ministry of Finance of the People's Republic of China (MoF) supports international accounting harmonization and is working towards achieving convergence of Chinese accounting practices with the requirements of International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB). Multiple sources confirm this finding and emphasize the fact that Chinese accounting practices are largely converged with the international norms and standards, however, certain differences still persist. More recently, in a 2009 assessment of the Chinese accounting and auditing practices, the World Bank commends China on making “impressive progress” in establishing an institutional framework for accounting, auditing and corporate financial reporting. The report reiterates China’s commitment to convergence of Chinese Accounting Standards (CASs, also known as Accounting Standards for Business Enterprises or ASBEs) with IFRSs and points out that full convergence is expected to be achieved by 2012. In September 2009, the MoF issued an exposure draft on the “Roadmap for Continuing and Full Convergence” of Chinese standards with IFRSs. Also, a PricewaterhouseCoopers 2009 report on IFRS adoption notes that in addition to Chinese standards, financial institutions must also prepare IFRS-compliant (as issued by the IASB) financial statements. The MoF has issued a separate standard for small-sized enterprises with simplified reporting requirements. Overall, despite the strong positives, the World Bank expresses concerns regarding the quality of accounting and auditing practices outside major cities in China. It also emphasizes the lack of adequate expertise among corporate accountants in preparation of financial statements and recommends capacity improvements in all sectors – the MoF, professional accounting bodies and the various regulators.

General Overview

Following the global financial crisis that began roughly in 2007, the Group of 20 (G 20) countries met in April and September 2009 emphasizing, once again, observance of international standards and codes for strengthening financial system stability internationally. Earlier, as fallout to the 1997 Asian financial crisis, 12 modules were developed by the World Bank and International Monetary Fund in order to evaluate the strengths and weaknesses of a country’s financial architecture. The Report on the Observance of Standards and Codes Accounting and Auditing (ROSC A&A) is one of the 12 modules which assesses national accounting and auditing practices/standards against International Financial Reporting Standards (IFRSs) (formerly known as International Accounting Standards, or IASs) and International Standards on Auditing (ISAs). Under this module, an assessment of Chinese accounting and auditing practices was conducted by the World Bank in October 2009. As noted in the World Bank report, “in response to the call from the G20 and Financial Stability Board (FSB) on establishing global uniform accounting standards, the MOF [Ministry of Finance] has prepared a roadmap for full convergence of CAS [Chinese Accounting Standards] with IFRS” (p. 13). In this regard, the World Bank points out that in September 2009, the Chinese MoF issued an exposure draft for a “Roadmap for Continuing and Full Convergence” of Chinese standards with IFRSs and is expected to achieve full convergence with IFRSs by 2012. The MoF plans to revise Chinese standards beginning 2010 which are likely to be completed by 2011. Implementation of revised national standards will start with large and medium-sized enterprises, beginning 2012. Overall, the report commends China on making “impressive progress” in establishing an institutional framework for financial reporting and modernizing its accounting standards.

However, despite the strong positives, certain weaknesses persist. For instance, the World Bank notes that the capacity of regulators needs to be further enhanced in order to ensure compliance with applicable financial reporting standards. The World Bank also finds that the accountancy profession needs to be strengthened to keep up with China’s growing economic development. Finally, the report points out to the difficulty of keeping up with the quality of accounting and auditing practices outside major cities in China.

As for the current situation, as explained in the World Bank ROSC, financial statements of all entities must be prepared in accordance with the unified accounting system of the state. The unified accounting system comprises different rules and regulations including the ASBEs (called CASs interchangeably throughout the report). Several sources on the subject confirm that Chinese standards are by and large converged with international requirements though differences exist. As an indicator to how well ASBEs are converged with IFRSs, the World Bank notes that “on December 12, 2008 the EU issued a regulation on the equivalence of third country accounting standards, among other things allowing Chinese enterprises listed or to be listed on the EU regulated markets to file financial statements prepared under the ASBE for the transitional period from 2009 to the end of 2011” (p. 29). As for the applicability of the Chinese standards, the World Bank recommends that the CASs should be made mandatory only for public interest entities whereas the rest be permitted to apply simplified reporting requirements. With respect to small entities, in 2004, the MoF issued a separate standard for small-sized enterprises Accounting System for Small Enterprises (ASSE) with simplified reporting requirements. Small enterprises can choose to apply ASSE or CAS.

In line with international practice, the accounting standard-setting process, as detailed in the World Bank report involves (1) developing a proposal for setting of a new standard; (2) drafting an exposure draft; (3) seeking public comments by publishing ED on China Accounting Standards Committee (CASC, which is part of the MoF) website and; (4) preparation of the final draft. The MoF develops Chinese accounting standards comprising a basic standard, 38 specific standards and implementation guidelines. According to the World Bank, the MoF is responsible for regulating Chinese accounting and auditing practices and as described in the ROSC the MoF is responsible for, “developing principles, issuing regulations, setting standards, ensuring compliance with financial reporting requirements, providing directions and setting requirements for the accounting and audit profession, and carrying out regular inspection and special investigations on the audit services provided by the statutory auditors” (p. 3). The MoF also translates IFRSs which are recognized by the IASB as an official translated publication of the IASB.

Per the description of the legal and regulatory framework provided in the World Bank report, the Accounting Law lays down the rules for preparation and presentation of financial statements which, as mentioned earlier, must be prepared in accordance with the unified accounting system of the state. In order to ensure a true and fair view of financial records, Chapter IV of the Accounting Law also requires corporate entities to establish an internal accounting supervision system. As for listed companies, per the Securities Law, these entities must submit interim and annual financial statements to the Chinese securities regulator, China Securities Regulatory Commission (CSRC). A 2004 Chinese Institute of Certified Public Accountants (CICPA) self-assessment notes that the CSRC formulates additional rules of accountancy for listed entities and also issues guidance to accounting firms engaged in services to entities dealing with securities. While the CSRC sets administrative punishment for non compliance with required accounting requirements, the CICPA supervises compliance with accounting standards for listed companies. The World Bank recommends that the monitoring and enforcement mechanisms at the stock exchanges needs to be strengthened.

Financial reporting requirements for banks and financial institutions are regulated by the China Banking Regulatory Commission (CBRC) which requires these entities prepare financial statements within four months after financial year-end. In addition to the disclosure requirements stipulated under the Accounting Law, the CBRC also sets requirements for additional prudential reporting by banks. Banks are required to submit monthly, quarterly, and audited annual financial statements to the CBRC. The CBRC also conducts on-site and off-site supervision to ensure that reporting requirements are met. However, the World Bank finds weaknesses in the supervisory regime and points out that “the CBRC needs to have a mechanism to regularly review the general purpose financial statements of banks and other financial institutions to ensure compliance” (p. 17).

With regards to supervision of insurance companies, the China Insurance Regulatory Commission (CIRC) ensures that that these entities submit audited financial statements along with additional reports as prescribed monthly, quarterly, and annually by the CIRC for prudential purposes. The World Bank, however, comments that the CBRC and CIRC both issue prudential requirements which impact the general purpose financial statements, which the World Bank points out, might result in inconsistencies in application of accounting regulations in these sectors. Although the CIRC ensures that the financial statements of insurance companies are verified by external auditors specifically with respect to “reinsurance activities, capital provisioning, liquidity, commissions, revenues, costs, profits, and profits distribution” (p. 8), the World Bank expresses a need to strengthen mechanisms to ensure complete compliance with reporting requirements. Furthermore, the 2009 World Bank report notes that the “CBRC and CIRC should develop a core group, imparting them additional training to identify accounting and auditing infractions in the financial statements of banks and insurance companies” (p. 24).

As mentioned earlier, the MoF is empowered to impose administrative sanctions on accounting firms and individuals for non compliance with the applicable rules and regulations. In addition, the CICPA performs a quality review of accounting firms every three years. As for education and training for accountants, the ROSC notes that there are concerns with respect to adequate exposure and level of practical knowledge of accountants. Also, the quality of academic education varies significantly from one university to another. The accounting curriculum has, however, been updated with the incorporation of a new subject “Corporate Strategies and Risk Management” and per the World Bank “the MOF-administered examination for accountants largely satisfies the requirements of IES [International Educational Standard] 6” (p. 11). With regard to the Code of Ethics, the 2008 (part III) CICPA self-assessment notes that in the first half of 2009, the new CICPA Code of Ethics, which was issued for public comments for the second time in September 2008, is expected to be approved by the MoF. The new code will bring the CICPA code in line with the International Federation of Accountants (IFAC) Code of Ethics. The CICPA is listed as a member on the IFAC website.

The Principles

IIIFRS 1: First-time Adoption of International Financial Reporting Standards (revised 2009)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 38 and the report points out that "similar to ASBE 38, IFRS 1 contains the transactions and events that require adjustments when an enterprise adopts IFRSs for the first time to prepare its financial statements" (p. 48). There is insufficient publicly available information, however, regarding compliance of accounting requirements applicable to other entities with the international standards.

NCIFRS 2: Share-based Payment (revised 2009)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 11 and unlike IFRS, "ASBE 11 only covers the accounting for share-based payment transactions for which services are received" (p. 22). Also, equity settled with cash alternatives is not addressed under ASBE 11. The report notes that PRC GAAP does not address the accounting for share based payments.

NCIFRS 3: Business Combinations (revised 2009)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed companies is ASBE 20 and the main difference is with regard to reverse acquisitions which are covered in IFRS 3 but are not addressed in ASBE 20. The 2002 Deloitte comparison does not address compliance of accounting requirements applicable to other companies under PRC GAAP with the international standards.

NCIFRS 4: Insurance Contracts (effective 2006)

According to the 2006 Deloitte report, the requirements of IFRS 4 are covered under ASBE 25 and ASBE 26. With regard to ASBE 25, the main difference identified is in the area of recognition and measurement of insurance contracts. The 2002 Deloitte comparison does not address compliance of accounting requirements applicable to other companies under PRC GAAP with the international standards.

The CIRC is the insurance sector regulator and requires that insurance companies submit audited financial statements and also other reports for prudential purposes. However, the assessment points out that the CBRC and CIRC both issue prudential requirements which impact the general purpose financial statements, which could lead to inconsistencies in application of accounting regulations in these sectors. More specifically, differences can arise in loan-loss provisioning of banks and calculation of technical reserves in the insurance companies due to the prudential requirements. Insurance companies are required to take into consideration CIRC-issued Rule No. 14, Preparation and Submission of Insurance Company Solvency Report: Insurance Groups and its Practice Guide the requirements of which differ from the measurement principle that would apply under CAS. “In some cases, such differences may lead to inconsistencies in application of accounting regulations across banks and insurance companies” (p. 15), the report adds. Furthermore, the report points out that the methodology for discounting technical provisions for pending claims is not in line with the internationally accepted practices.
Although the CIRC also ensures that the financial statements of insurance companies are verified by external auditors specifically with respect to “reinsurance activities, capital provisioning, liquidity, commissions, revenues, costs, profits, and profits distribution” (p. 8), the World Bank expresses a need to strengthen mechanisms to ensure complete compliance with reporting requirements. Furthermore, the 2009 World Bank report notes that the “CBRC and CIRC should develop a core group, imparting them additional training to identify accounting and auditing infractions in the financial statements of banks and insurance companies” (p. 24).

NCIFRS 5: Non-current Assets Held for Sale and Discontinued Operations (revised 2009)

According to the 2006 Deloitte report, there is no equivalent Chinese standard. However, certain aspects of IFRS 5 are covered under ASBE 30 and ASBE 4. The 2002 Deloitte comparison does not address compliance of accounting requirements applicable to other companies under PRC GAAP with the international standards.

NCIFRS 6: Exploration for and Evaluation of Mineral Resources (effective 2006)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 27 and differences were found in the accounting policies for exploration and evaluation of assets. The 2002 Deloitte comparison does not address compliance of accounting requirements applicable to other companies under PRC GAAP with the international standards.

IIIFRS 7: Financial Instruments: Disclosures (effective 2007)

Financial reporting requirements for banks and financial institutions are regulated by the CBRC which requires these entities prepare financial statements within four months after financial year-end. In addition to the disclosure requirements stipulated under the Accounting Law, the CBRC also sets requirements for prudential reporting by banks. Banks are required to submit monthly, quarterly, and audited annual financial statements to the CBRC which ensures that the financial reporting requirements are met. The CBRC also conducts on-site and off-site supervision. However, the World Bank points out that “the CBRC needs to have a mechanism to regularly review the general purpose financial statements of banks and other financial institutions to ensure compliance” (p. 17). Further, the report notes that “the CBRC and CIRC should develop a core group, imparting them additional training to identify accounting and auditing infractions in the financial statements of banks and insurance companies” (p. 24).

The World Bank recommends that the CBRC should align the banking norms on loan loss provisioning with applicable standards and Basel recommendations. The report notes that “in this regard, it should undertake a comprehensive study and cover the impacts for banks in terms of (a) amount of provisions, (b) information system supporting the monitoring and accounting of loans, (c) capacity-building efforts required for banks to be able to apply a methodology consistent with accounting standards and Basel Committee’s principles” (p. 24). Overall, the assessment points out that the CBRC and CIRC both issue prudential requirements which impact the general purpose financial statements and could lead to inconsistencies in application of accounting regulations in these sectors. However, according to the 2006 Deloitte report, the requirements for IFRS 7 are covered under ASBE 37 and the report finds no major differences between the Chinese and international requirements.

NCIFRS 8: Operating Segments (effective 2009)

According to the 2006 Deloitte comparison, the corresponding Chinese standard for listed entities is ASBE 35 and the report finds differences in the scope of segment reporting under ASBE and IFRS. With regard to other entities, the 2002 Deloitte report recognizes certain differences between the international requirements and PRC GAAP.

NCIAS 1: Presentation of Financial Statements (revised 2009)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed companies is ABSE 30 and differences exist in the area of analysis of expenses. With regard to other entities, the 2002 Deloitte comparison points out a number of differences between the international standard and PRC GAAP.

NCIAS 2: Inventories (effective 2005)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 1, which is similar to IAS 2. With regard to other entities, the 2002 Deloitte comparison points out differences in the accounting for producers' inventories of livestock, agricultural and forest products, and mineral ores.

NCIAS 7: Cash Flow Statements (effective 1994)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 31 and differences were observed in the reporting of cash flows from operating activities and the classification of dividends and interests. With regard to other entities, several differences were identified between international requirements and PRC GAAP in the 2002 Deloitte comparison.

NCIAS 8: Accounting Policies, Changes in Accounting Estimates and Errors (effective 2005)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 28 and no differences between IAS 8 and ABSE 28 were cited in the report. With regard to other entities, the 2002 Deloitte report points out differences in the presentation of extraordinary items, non-mandated changes in accounting policies and change in existing methods for existing assets.

ENIAS 10: Events after the Reporting Period (effective 2005)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 29 and no differences between IAS 10 and ABSE 29 were identified in the report. With regard to other entities, the 2002 Deloitte report notes that dividends declared after the end of a financial year and before the financial statements are authorized for issue and unlike IFRS, are an adjusting event.

NCIAS 11: Construction Contracts (effective 1995)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed companies is ASBE 15 and differences exist in the accounting of costs for securing a contract. The 2002 Deloitte comparison does not address compliance of accounting requirements applicable to other companies under PRC GAAP with the international standards.

NCIAS 12: Income Taxes (effective 2001)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 18 and no major differences were identified in the report. With regard to other entities, the 2002 Deloitte report recognizes a few differences between the international requirements and PRC GAAP.

NCIAS 16: Property, Plant and Equipment (revised 2009)

According to the 2006 Deloitte report, the requirements for IAS 16 are covered under ASBE 4 and ASBE 7. Unlike IFRS, the Chinese standard does not allow for a revaluation model. With regard to other entities, the 2002 Deloitte comparison points out that differences exist in the accounting for exchanges of dissimilar fixed assets. Further, the 2009 World Bank report notes that “given China’s economic size, there appears a shortage of high-quality and credible expertise on the valuation of property, plant, and equipment” (p. 19) limiting the reliability of valuations used for the purposes of privatization, business combination, and other non-cash transactions.

NCIAS 17: Leases (effective 2005)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 21 and the main difference is in the accounting of leasehold land. With regard to other entities, the 2002 Deloitte report points out several differences between IAS 17 and the requirements under PRC GAAP.

IIIAS 18: Revenue (effective 1995)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 14 and no major differences exist between the national and international standard. The 2002 Deloitte comparison does not address compliance of accounting requirements applicable to other companies under PRC GAAP with the international standards.

NCIAS 19: Employee Benefits (revised 2009)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed companies is ASBE 9 and unlike IFRS, ASBE 9 does not address the accounting requirements for defined benefit plans. The 2002 Deloitte comparison does not address compliance of accounting requirements applicable to other companies under PRC GAAP with the international standards.

NCIAS 20: Accounting for Government Grants and Disclosure of Government Assistance (revised 2009)

According to the 2006 Deloitte report, the corresponding Chinese standard is ABSE 16 and differences exist in the presentation of asset-related grants. The 2002 Deloitte comparison does not address compliance of accounting requirements applicable to other companies under PRC GAAP with the international standards.

NCIAS 21: The Effects of Changes in Foreign Exchange Rates (effective 2005)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 19 and main difference is with regard to the presentation currency. Concerning other entities, the 2002 Deloitte comparison notes that unlike IFRS (which does not require any special treatment), under PRC GAAP, exchange differences arising during the preoperating period is deferred until the entity commences operations.

NCIAS 23: Borrowing Costs (revised 2009)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 17 and differences exist in the accounting for finance charges with respect to finance lease. With regard to other entities, the 2002 Deloitte report points out several differences between the international standard and PRC GAAP.

NCIAS 24: Related Party Disclosures (effective 2005)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 36. The report notes that "state-controlled entities are not regarded as related parties simply because they are state-controlled" (p. 4), however, there is no exemption for state-controlled entities under IAS 24. The 2002 Deloitte comparison also identifies differences between requirements under IAS 24 and PRC GAAP.

NCIAS 26: Accounting and Reporting by Retirement Benefit Plans (effective 1998)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed companies is ASBE 10 and unlike IFRS, ASBE 10 does not deal with the accounting by defined benefit plans. The 2002 Deloitte comparison does not address compliance of accounting requirements applicable to other companies under PRC GAAP with the international standards.

NCIAS 27: Consolidated and Separate Financial Statements (revised 2009)

According to the 2006 Deloitte report, requirements of this standard are covered under ASBE 2 and ASBE 33. With regard to ASBE 2, the report notes that differences exist in the separate financial statement accounting for subsidiaries, associates and jointly controlled entities. Concerning ASBE 33, differences were primarily found in the definition of the reporting period and the venturer's choice of accounting method in jointly controlled entities. The 2002 Deloitte report also identifies several departures from international requirements under PRC GAAP.

NCIAS 28: Investments in Associates (revised 2009)

According to the 2006 Deloitte report, requirements of this standard are covered under ASBE 2 and differences exist in the accounting methods applicable for the consolidated financial statements for the venturer. With regard to other entities, the 2002 Deloitte comparison notes that differences exist in the accounting for goodwill.

NCIAS 29: Financial Reporting in Hyperinflationary Economies (revised 2009)

According to the 2006 Deloitte report, since China is not a hyperinflationary economy, there is no ASBE equivalent to IAS 29. However, ASBE 19 prescribes requirements for the translation of financial statements of a foreign operation which operates in a hyperinflationary economy, the report adds. The 2002 Deloitte comparison does not address compliance of accounting requirements applicable to other companies under PRC GAAP with the international standards.

NCIAS 31: Interests in Joint Ventures (revised 2009)

According to the 2006 Deloitte report, "for jointly controlled entities, ASBE 2 only allows the equity method of accounting. IAS 31 also allows proportionate consolidation" (p. 4). With regard to unlisted entities, the 2002 Deloitte comparison identifies certain departures from the international requirements in the area of accounting for investments in the following: joint ventures in which the investor has joint control; investor has significant influence but not joint control and joint ventures in the venturer's separate financial statements.

NCIAS 32: Financial Instruments: Disclosure and Presentation (revised 2009)

According to the 2006 Deloitte report, the requirements for IAS 32 and IFRS 7 are covered under ASBE 37 for listed companies. The report finds no major differences between the Chinese and international standards. With regard to other entities, the 2002 Deloitte report points out a few differences and notes that unlike IFRS, "dividend payments are not deducted in measuring net profit or loss" (pp. 25-26) and convertible debt instruments are classified as a liability.

NCIAS 33: Earnings per Share (effective 2005)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 34 and the report notes that "IAS 34 requires disclosure of the basic and diluted EPS amounts for profit or loss from continuing operations and those for discontinued operations. ASBE 34 only requires the calculation of EPS based on net profit or loss for the current period" (p. 46). The report points out that under PRC GAAP, there is no specific standard on EPS.

NCIAS 34: Interim Financial Reporting (effective 1999)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed entities is ASBE 32 and differences were identified in the components of an interim financial report. With regard to other entities, the 2002 Deloitte report notes differences in the measurement of income tax expense in interim financial statements under PRC GAAP.

NCIAS 36: Impairment of Assets (revised 2009)

According to the 2006 Deloitte report, the requirements for IAS 36 are covered under ASBE 8. The report notes that "ASBE 8 prohibits the reversal of all impairment losses but IAS 36 only prohibits the reversal of impairment loss for goodwill" (p. 20). With regard to other entities, the 2002 Deloitte comparison notes that PRC GAAP does not provide specific guidance on impairment of assets that do not generate cash flows individually.

NCIAS 37: Provisions, Contingent Liabilities and Contingent Assets (effective 1999)

According to the 2006 Deloitte report, the corresponding Chinese standard is ASBE 13 and no major differences exist between the national and international standards. With regard to other entities, the 2002 Deloitte comparison notes that differences exist in the area of measurement of provisions and provisions arising from restructuring of an entity.

NCIAS 38: Intangible Assets (effective 2004)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed companies is ASBE 6. Unlike IFRS, which allows the cost and the revaluation model, ASBE 6 only allows the cost model. With regard to other entities, the 2002 Deloitte comparison points out several differences including mineral rights and expenditure to explore, develop, and extract minerals which, unlike IFRS, are covered under PRC GAAP.

NCIAS 39: Financial Instruments: Recognition and Measurement (revised 2009)

According to the 2006 Deloitte report, the requirements for IAS 39 are covered under ASBE 12, ASBE 22, ASBE 23 and ASBE 24. Concerning ASBE 12, the report notes that unlike IFRS, "the principles of derecognition of debts are not covered in ASBE 12" (p. 22). No major differences were recognized between ASBE 22, 23, 24 and IAS 39. With regard to other entities, the 2002 Deloitte comparison points out that a number of differences exist in the area of short-term and long-term investment and creditor and debtor accounting for debt restructuring Also, unlike IFRS, under PRC GAAP, hedge accounting is not addressed.

NCIAS 40: Investment Property (revised 2009)

According to the 2006 Deloitte report, the corresponding Chinese standard for listed companies is ASBE 3 and differences exist in the accounting for land use rights. With regard to other entities, the 2002 Deloitte comparison points out that differences exist in the measurement basis of investment property.

NCIAS 41: Agriculture (revised 2009)

According to the 2006 Deloitte report, "biological assets shall be measured using the cost model unless there is evidence of a reliable fair value under ASBE 5. This is in direct contrast to IAS 41 which requires fair value to be used unless it is clearly unreliable" (p. 4). With regard to other entities, the 2002 Deloitte comparison notes that PRC GAAP, unlike IFRS, does not allow for the use of fair value.