This report presents the results of an IMA study with the assistance of the Ministry of Commerce of the People's Republic of China to:
- Compare international and Chinese accounting policies, procedures, and methods;
- Examine both the regulations and the actual practices companies follow;
- Evaluate the extent to which Chinese cost management systems are influenced by open market economy practices vs. more planned economy practices; and
- Investigate whether Chinese costing practices contribute to product dumping by Chinese companies.
- Adoption of the 2006 ASBEs have begun to address the prior inappropriate treatment of specific cost items:
- While costing practice differences exist between Chinese companies and Western companies, a convergence of practice is in process.
- Most Chinese companies follow traditional methods for allocating costs to products, although the use of more accurate costing techniques is emerging.
- Costing issues can arise from differences: a) Between how Chinese and Western companies treat the various types of costs. b) In how costs are allocated to products.