![]() The issue facing the SEC is that GAAP is vastly different from IFRS so any kind of progress has been painstakingly slow. The US SEC is trying to move from this GAAP process to something called the International Financial Reporting Standards (IFRS). Although they do help in regards to transparency and financial statements, they do not ensure or make any promises that your company’s financial reports are correct or don’t have any errors that could result in misleading investors, accidentally or purposely. GAAP are recommended standards and are not completely infallible. These are the regulations that the US Securities and Exchange Commission (SEC) prefers to use that lay out industry-specific principles and concepts to marshal the transparency and consistency of financial reporting to ensure compliance between organizations. They are a collection of accounting rules and regulations that are used for standardized financial reporting. GAAP stands for Generally Accepted Accounting Principles but is sometimes also called US GAAP. Anyone who fails to do so can face severe penalties, extra expenses, or even have their business licenses revoked.įIEs preparing their annual audits and yearly financial reports need to follow something that is called the Chinese Generally Accepted Accounting Principles (GAAP), but is also referred to as the Chinese Accounting Standards (CAS), which are essentially two frameworks. It’s compulsory to comply with yearly audits and a litany of relevant tax liabilities so that FIEs can distribute and repatriate profits or any kind of dividends back to their home countries. They are a collection of accounting rules and regulations that are used for standardized financial reporting.Īll Foreign Invested Enterprises and WFOE companies in China need to follow all statutory annual audit and compliance processes, as stated by the PRC Company Law and other similar laws.
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