Previously wrote about the apparent paradox of a one party state adopting International Financial Reporting Standards, as opposed to continuing to reserve to itself the power to set such standards. A former student commented as follows (reproduced with permission):
I have been following your blog and have read your observations on the application of International Financial Reporting Standards (IFRS) in China. I’ve done some reading on accounting standard-setting in China, with the commentaries being in Chinese, and the information I could find involved very few comments against China’s adoption of IFRS. I think this may be due to two reasons. One is that with China’s political structure, it is very hard to be the dissonant voice against the choice of the central government. All of the articles I have read praised IFRS, using the usual pro-IFRS argument that IFRS creates a universal language for accounting. None of the articles expanded on the applicability and suitability of these standards to the unique Chinese economic environment. Second, because China is still a developing country with a relatively weak framework of law and accounting, IFRS, even with its vagueness and imperfections, may in fact be a more comprehensive and complete model, as compared to the existing Chinese model.
While I was in China, I perused some CPA (China) examination preparation materials at the local book store. The translation of the definition of accounting terms, such as liability correspond well to definitions as stated by IFRS. This caused me to recall the final student class presentation, on Heidhues and Patel. regarding the equivalence of IFRS across languages. Difficulties in interpretation can occur between translations, such as between English to German, and this was even where both languages have the same roots. I suspect languages radically different from English, such as Chinese, would have greater ambiguity when translated, due to loss of meaning in interpretation and, the depth of knowledge of the translator. It would seem translating IFRS to Chinese could involve less global ambiguity than would be the case if existing Chinese standards were translated into other languages.