For Press Release Ceremony for Chinese Accounting Standards System and Auditing Standards System held in Beijing

For Press

Release Ceremony for Chinese Accounting Standards System
and Auditing Standards System held in Beijing

On the afternoon of February 15, the Ministry of Finance (MOF)
held a ceremony to release 39 Chinese Accounting Standards for
Business Enterprises and 48 Auditing Standards for Certified Public
Accountants, marking the establishment of an accounting standards
system for business enterprises and an auditing standards system
for certified public accountants that suit the development of the
market economy and convergence with the international practices.

Jin Renqing, Minister of Finance, attended the ceremony and
delivered an important speech. He pointed out that the release and
implementation of the two standards systems will facilitate the
implementation of people-centered scientific approach to
development, help improve market economic system and further
expand opening-up, representing an important contribution on the
part of fiscal and accounting work to economic and social
development. Minister Jin emphasized that efforts should be made
to promote the implementation of the two standards systems. Firstly,

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promote publicity and training and make the 3rd National
Accounting Knowledge Contest a success. Secondly, make careful
preparation for the implementation of the systems. MOF has
decided that all listed companies shall apply the accounting
standards system for business enterprises from January 1, 2007,
and all accounting firms in China shall apply the auditing standards
system for Certified Public Accountants from January 1, 2007. All
parties involved should prepare themselves well to ensure smooth
implementation. Thirdly, work hard to build integrity and credibility in
the accounting and auditing practice and to develop high-calibre
accounting personnel. The number of high-calibre accounting and
auditing personnel, who are familiar with international practices,
equipped with international perspective, proficient in accounting and
auditing profession, and capable of exploring the international
market, is expected to reach 3,000 in five to ten years. Fourthly,
strengthen supervision and inspection. For sometime in the future,
a key part of fiscal supervision and the inspection of the quality of
accounting information will include inspection of listed companies
on how they implement the Accounting Law and accounting
standards system for business enterprises. Special inspection or
extended inspection will be conducted on how accounting firms
implement the auditing standards system.

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Lou Jiwei, Vice Minister of Finance and Chairman of China
Accounting Standards Committee (CASC), briefed the audience on
the accounting standards for business enterprises. Chinaˢs
Accounting Standards System for Business Enterprises consists of
one basic standard, 38 specific standards and related application
guidance. Vice Minister Lou pointed out that the newly released
accounting standards system emphasizes the new philosophy of
providing decision-useful accounting information to investors and
the public. In convergent with international practice, this system,the
first complete and integrated system in China, provides useful
experience for improving International Financial Reporting
Standards(IFRSs), and represents a new step forward and
breakthrough in building China’s Accounting Standards for
Business Enterprises.

Liu Zhongli, President of Chinese Institute of Certified Public
Accountants (CICPA), gave an introduction to the auditing
standards system for certified public accountants. China’s Auditing
Standards system consists of standards on assurance, related
services and quality control of accounting firms. The newly released
system reflects requirement for convergence with the international
auditing standards, meets the need of certified public accountants

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for practicing under the new situation, highlights the purpose of the
profession to safeguard public interests, makes the auditing
standards more reader-friendly and easier to apply, and represents
a historic breakthrough.

Dong Dasheng, Deputy Auditor-General of National Audit
Office, Li Wei, Vice Chairman of State-owned Assets Supervision
and Administration Commission of the State Council, Li Xiaoxue,
Vice Chairman in charge of Disciplinary Department of China
Securities Regulatory Commission, Zhou Zaiqun, Vice Governor of
Bank of China, Gu Renrong, General Manager of China Rightson
Certified Public Accountants, David Tweedie, Chairman of
International Accounting Standards Board (IASB), and Graham
Ward, Chairman of International Federation of Accountants (IFAC)
spoke at the ceremony.

The ceremony was chaired by Wang Jun, Vice Minister of
Finance.

Chi Haibin, President of Accounting Society of China, and Liu
Changkun, Vice President of China Association of Chief Financial
Officers, were present at the ceremony.

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About 400 people participated in the ceremony, including
members of CASC, members of Chinese Auditing Standards
Committee of CICPA, representatives from the business community,
academia and intermediaries, senior officials from financial
departments (bureaus) of the central government, local fiscal
departments and institutes of certified public accountants and
representatives from Hong Kong Institute Of Certified Public
Accountants and Macau Financial Services Department.

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Statement of Sir David Tweedie
Chairman, International Accounting Standards Board

I am honoured to be here today to mark what I believe is an important step for the
development of the Chinese economy and its place in the world’s increasingly integrated
capital markets. The adoption of the new Chinese accounting standards system brings about
substantial convergence between Chinese standards and International Financial Reporting
Standards (IFRSs), as set by the International Accounting Standards Board (IASB). Like the
United States and Japan, China is committed to convergence with IFRS.

The new standards are the culmination of what is, in my view, an extraordinary effort by the
Ministry of Finance of the People’s Republic of China and the China Accounting Standards
Committee (CASC). My fellow members and senior staff of the International Accounting
Standards Board are delighted to have assisted in this effort. Over the past twelve months, we
have made several trips to Beijing to work with the officials and staff of the Ministry of
Finance, and we have been impressed by their dedication to this undertaking and their
willingness to consider new solutions. We will continue to co-ordinate with the China
Accounting Standards Committee in the future.

The benefits of these accounting reforms for China are clear. The new Chinese standards that
incorporate accounting principles familiar to investors worldwide will encourage investor
confidence in China’s capital markets and financial reporting and will be an additional spur
for investment from both domestic and foreign sources of capital. For Chinese companies
that are increasingly playing a global role, the acceptance of the new standards should also
reduce the cost of complying with the accounting regimes of the different jurisdictions in
which they operate.

I do not see this as the end of the efforts to achieve convergence between Chinese accounting
standards and IFRSs. As both the Ministry of Finance and the IASB have acknowledged,
convergence is a process. The intention is that a company applying Chinese accounting
standards should produce financial statements that are the same as those of a company that
applies IFRSs. I believe that is a realistic and desirable goal in the light of the progress that
has been made.

In the coming months and years, the IASB will intensify its convergence efforts in China.
This is reflected in the fact that China is participating in many of the IASB’s activities. Our
oversight body, the International Accounting Standards Committee Foundation, recently
appointed Liu Zhongli, President of the Chinese Institute of Certified Public Accountants and
former Minister of the Ministry of Finance, to the organisation’s Trustees. Vice-Minister
Wang Jun serves on our Standards Advisory Council. And we have the benefit, for the
second time, of having a senior staff member from the Ministry of Finance in residence on
our staff. We look forward to working with them. We are also sure that the Ministry of
Finance will make a strong contribution to achievement of our objective of a single set of
global accounting standards.

Thank you.

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