In a recent meeting with the International Auditing and Assurance Standards Board (IAASB), the Chinese Auditing Standards Board (CASB) has reaffirmed its commitment to support the international convergence of auditing standards.
“As the largest developing country in the world, China firmly supports the efforts of the International Federation of Accountants (IFAC) and the IAASB to promote international convergence of auditing standards,” states Dr. Wang Jun, Vice Minister of the Chinese Ministry of Finance and Chairman of the CASB. “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 Chinese market economy and the overall trend of economic globalisation and international convergence.”
IAASB Chairman Prof. Arnold Schilder states that the international convergence of auditing standards—the importance of which has been further manifested during the global financial crisis—is a strategic objective for the IAASB and IFAC. “We applaud the great efforts and the enormous progress that China is making toward international convergence. The Chinese government and the Chinese accountancy profession made the decision to converge and moved rapidly to give effect to that decision. We hope this serves as a model for developing countries and countries with economies in transition.”
Previously, the parties had signed a milestone joint statement in December 2005, which pointed out that establishing and improving a single set of high-quality global auditing standards is a logical response to the trend of economic globalisation. It also acknowledged the key role these standards play in reducing the risk of decision-making by investors for efficient capital allocation, as well as in promoting economic development and maintaining financial stability all over the world.
In recent years, the IAASB has conducted the Clarity Project to enhance the clarity of International Standards on Auditing (ISAs), 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 accordance with the principle of continuous and comprehensive convergence, the CASB has completed the revision of Chinese Standards of Audit (CSAs), and achieved full convergence with the clarified ISAs. The revised CSAs were officially released in early November 2010, and are effective 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.
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