Accounting Standards will actually differ from one region to another. Different organizations also develop different accounting standards for their decision-making.
The Australian Accounting Standards Board (AASB) sets such standards in Australia. This board is to make sure that, the accounting standards are followed professionally in reporting accounting decisions (Monti, Belkaoui, 1991).
By and large these standards almost show commonness between Australia and China. However, to both cases, accountants are required to maintain high standards in their accounting reports.
In both of the countries, they have adopted accounting standards which are required internationally (International Accounting Standards). These standards regulate the accounting system applied internationally so that accounting system is applied professionally. These standards have been set to cater for the changing global volume of business in which corporations is undertaking their businesses internationally. With this aspect accounting standards should be set so as to foster high standards of accountability in professional accounting.
The aim of these international standards of accounting between Australia and China is to foster quality accounting results both in the domestic understanding as well as any inter-global linkages that these countries may engage in. Such standards in both of these countries promote a global proficiency and reliability (Mickee, Garner, 2002).
Due to the current nature between the ownership and control of businesses, high accounting standards have to be maintained to ensure that stakeholders’ requirements are ensured. Basically, in recent corporations, expansions of firms in Australia and China have been too high. Such expansions have led to increased divergence between the ownership and management of these business firms. To ensure this, International Accounting Standards have been highly applicable in the two countries, to ensure reliability of the shareholders to the accounting information. Either, there have constantly been high capital-inflows in the two countries and the global scenery. To ensure such quality of reputation in accounting system, there has been the use of International Accounting Standards (River, 1994).
Despite the uniqueness in the accounting standards between China and Australia, capital-inflows have been the subject to great difference where the difference in the business environment has called for a difference in jurisdiction in their respective capital regulations.
Due to the high advancing economic growth in China, it has been notably more costly to access capital-inflows by foreigners in China than Australia. The Chinese Accounting Standards (CAS) has created many cross-border bureaucracies that deter foreign investor from entering it capital market (Chen, 2004).
For two countries, companies are expected to apply the International Accounting Standards, which are reinforced for the respective accounting bodies in these countries. In these two countries auditors are supposed to ensure that, the, notable accounting standards have been met in companies accounting systems.
In both countries, the standards should never compromise high quality and such reports should be supported by clarity of evidence and infrastructure for a valid interpretation and application of accounting standards. However, this high quality requirement between China and Australia may vary differently to embrace the different traditions of accounting maintained by the two countries. However, such quality should be within the guidelines of International Accounting Systems. Such high quality in both countries is ensured by the adherence of the international neutral principles governing accountancy. High quality is maintained to ensure reliability for such accounting information to the investors and other users of the accounting system reports. (Lo, Tian, 2005)
In both China and Australia, high standards of quality in restricted. This is in the understanding of the importance of the audit system in business organizations. The audit standards require independency in scrutiny of financial statements by the auditors. Only reported accounting work subject to independent auditing can be voted in as reliable. However, the requirements in auditing are less developed in Australia than in China due to the less development in business structures in Australia. In China, which has the 16 of the worlds most developed companies, the need for audit efficiency has been very high. Investors will only rely on the adequacy of accounting reports, prepared on high quality basis by the auditors. (Otsuka, Lio, 1998)
Effectiveness in controls by the audit firms; in both Australia and China, high quality controls in the auditing system have to be ensured. To achieve this, auditors are called to perform their work with high integrity, professionalism and independency. Through their quality control, auditors are able to reveal the business prospective in a clear manner to the investors (Hay, 1994).
High professionalism; where in the both countries, they have set professional education requirements for the accountant in high professional manner which incorporates the required standards of international accounting. High accounting in both of the countries has been ensured through ensuring high academic professional qualification for those entering the accounting profession. However, there is a difference in the academic requirement between them, where syllabuses have been set to accommodate the business law traditions in the countries respectively (Heely, Nersesian, 1993).
Effectiveness in regulations; in both of the countries, the standards are monitored by different units which works interdependently. Such are the registrars of commission to the accounting boards, self-regulation of corporations and a private sector authority.
However, for both the countries, the authorities for each differ in authorities and regulations, where parties from different group should perform a different designated work prescribed by the law.
References
Chen, J. (2004) Corporate Governance in China. New York, Routledge Courzon.
Hay, D (1994) Economic Reform and state-owned Enterprises in China. Oxford, University Press.
Lo, V., Tian, X. (2005) Law and Investment in China: The Legal and Business Environment after Chinas WTO’s Accession. New York, Routledge Courzon.
Mckee, D $ Garner, D. (2002). Crisis, Recovery, and the Role of Accounting Firms in the Pacific Basin (2002), Westport, CT. Quorum Books.
Monti, J, & Belkaoui, A. (1991) Accounting in Dual Economy. Westport CT, Quorum
Otsoka, K., Liu, D., Murakami, N: (1998) Industrial Reform in China: Past Performance and Future Prospects. Oxford, Oxford University Press.
River, R (1994). Setting standard for Financial Reporting FASB and the struggle for control of a critical process, Westport, CT., Quorum Books.