Protection for accurate accountants?

Blind to the demands of Chinese business, the country's accounting system has instead been guided by the demands of state planners.

Aware of this and in principle determined to repair the damage, China's government this month began requiring all companies listed on the Shenzhen and Shanghai stockmarkets to prepare their accounts according to something approaching International Financial Reporting Standards...

Aware of this and in principle determined to repair the damage, China's government this month began requiring all companies listed on the Shenzhen and Shanghai stockmarkets to prepare their accounts according to something approaching International Financial Reporting Standards...

As with any big reform, this shift is easy to announce and hard to carry through. The transition China has chosen is ambitious in the extreme and requires several ingredients that are in desperately short supply.

Two of these are much discussed—a shortage of experienced accountants and the lack of deep financial markets (which international reporting standards use to price assets such as property and financial instruments). Neither of these shortcomings can be rapidly fixed, so the use of the new standards is bound to be fraught with bungles and misjudgments. All the more so because China gave itself just over a year to make the transition. Many people in the accounting profession mutter that it would have been wiser for the government to take longer, as many other countries that are better able to make the change have done.
Below the line, beyond the pale

This criticism is whispered, not shouted, because the third crucial ingredient is missing. There is a deep-seated fear within China that the government and its companies will punish anyone who complains, either through direct retribution, or, just as damaging, through quiet blacklisting. The new accounting standards will not work unless people criticise and complain; but China's history does not encourage dissent. The country has never supported a truly objective, independent accounting system. Would a place that jails reporters for unearthing corruption offer any more protection to accurate accountants?

Protection for accurate accountants? It's not likely. More at Cultural revolution.