Tuesday, November 23, 2010

Chinese Auditing Standards Board Is in Full Convergence with International Financial Auditing Standards

The Chinese Auditing Standards Board has adopted financial auditing standards that are in full convergence with the clarified international auditing standards promulgated by the IAASB. The standards will take effect for audits of financial statements for periods beginning on or after January 1, 2011. During the process of international convergence, the CASB made limited additions it considered necessary and maintained some standards dealing with matters that are not specially covered in ISAs to reflect China’s unique circumstances and business requirements, such as standards for the verification of capital contributions and communication between predecessor and successor auditors. The IAASB recognizes that such additional requirements may be necessary and are acceptable where they do not conflict with ISAs.

In recent years, the IAASB has conducted the Clarity Project to enhance the clarity of international standards on auditing, which involved the application of new drafting conventions to all ISAs and substantial revisions of a number of ISAs. On February 27, 2009, the Clarity Project reached its completion with the approval of the Public Interest Oversight Board (PIOB). Auditors worldwide now have access to 36 newly updated and clarified ISAs and a clarified International Standard on Quality Control (ISQC).

In announcing China's firm support for the efforts of the IAASB to promote international convergence of auditing standards, Dr. Wang Jun, Vice Minister of the Chinese Ministry of Finance and Chairman of the CASB noted that the fundamental principle of drafting the Chinese auditing standards is to continuously improve them, as well as achieve continuous and comprehensive convergence with international auditing standards in line with the development of the Chinese market economy and the overall trend of economic globalization and international convergence.