Author Archives: kinnari.shah

I came across an article in the Financial Times on Dec 10th 2010, which talked about change in accounting standards.

‘Hong Kong Exchanges & Clearing announced on Friday that it would allow Chinese companies listed in the city to rely solely on mainland auditing companies and accounting standards to prepare their financial statements – a move corporate governance activists said would reduce local regulatory oversight.’

HKEx said the move “would increase market efficiency and reduce compliance costs of mainland incorporated companies listed in Hong Kong”. The exchange said that the majority of respondents to the public consultation that had taken place between August and October 2009 felt that mainland accounting standards had “substantially converged with Hong Kong accounting standards”.

HKEx said it believed “the co-operation agreements between Hong Kong and mainland regulators will enable effective monitoring and investigation of audit firms”, but did not outline what role the Hong Kong regulators would play.

Mr Turley, Chairman and CEO of Ernst and Young in his report in the Wall Street Journal, dated Nov 2007 has expressed his support for the SEC to set a certain date for the shift to IFRS.

Currently US companies follow the US GAAP as the financial accounting standards. The SEC has already allowed non-US companies to file US financial reports under the IFRS. They are wondering whether to allow the US companies to shed its former accounting standards (US GAAP) in lieu of the international IFRS.

A single set of high quality global standards have a number of benefits

(1) Greater Efficiency within companies

(2) Savings on legal and accounting experts

(3) Benefits for the investors: IFRS would prove to be a new level of reliable source for the investors.

(4) IFRS would provide a readily available foundation for capital markets, which could promote investments in emerging markets.

IFRS is becoming the dominant global language for the business. Many countries have already set dates for the change and according to the writer of this report, US too should set a date so that the companies can make necessary legal and regulatory changes for the shift.