Highlights in This Issue
President Li Yong chairs the 1st President Meeting of the 5th Council of CICPA
President Li Yong addressed the meeting on two significant things that took place since the 5th CICPA National Assembly of Delegates. One is that at the Workshop on Social Management and Its Innovation of Provincial and Ministerial Leaders, General Secretary Hu urges all to advance the role of social organizations and institutes in the innovation of social management. The second is the national 12th Five-Year Plan requires to promote scientific development and marks the advancement of service industry as one of the priorities in the transformation of economic development models. President Li emphasized that the whole CPA profession should adapt itself to the new changes and needs of social and economic development. He encouraged all to further develop the five-year working plan, grasp the new opportunities of innovative social management and make relentless efforts to achieve leaping development of the profession.
Secretary General Chen Yugui Calls for a Miracle of Accounting in the Great Development of Trade in Services
Dr. Chen Yugui, Deputy President and Secretary General of CICPA delivered a keynote speech at the “Accounting and Appraisal Services” Forum of the 3rd China Trade in Services Congress convened on June 2nd, 2011. Dr. Chen stated that it is an inevitable choice of transforming economic development models to vigorously promoting trade in services. Accelerating the advancement of trade in accounting services not only provides a strong support to enhance trade in services but also is a key measure to push forward the development of the profession. While promoting trade in accounting services, one should fully understand the opportunities and challenges within the profession. From the aspect of CPA firms, they are facing the constraints of imperfect internal governance, shortage of professional talents. From the aspect of the environment, the profession is limited by the difference of laws and systems in various jurisdictions, the disparity of technical standards and trans-national regulation; From the aspect of trade in services, it also needs to improve the research and consistency of the rules, methods and approaches of developing trade in services.
Study on the Model of Enterprises Credit Evaluation Based on Financial and Accounting Information
The development of securities market in China is still improving, and the database of enterprises’ default behaviors is also insufficient. As a result, there are big constraints when frontier foreign models based on modern risk theory are applied. Given the current conditions in China, the information that can be most effectively used is the financial and accounting information published by enterprises. This paper establishes a model of credit evaluation (Logit model) based on financial and accounting information by collecting the data between 2005 and May 2010, and tests the contribution of ‘audit opinion’ to the model. The findings suggest that ‘audit opinion’ does not improve the effectiveness of prediction by the model and is more suitable to be adopted as a referential measure of the credibility of financial information released by enterprises outside the model.
‘Protocol Control’ and Its Accounting Treatment
‘Protocol control’, also known as ‘contract control’, is another model of control generated in the process of overseas indirect listing versus the model of equity control. It is the model that overseas special purpose companies do not directly own the shares of domestic companies but have substantial control over the ‘people, capital and assets’ of these companies through a series of contracts arrangement. This allows the transfer of economic benefits of domestic companies abroad and achieves the objective of listing. This paper mainly discusses the origin and application of the ‘protocol control’ model, as well as an analysis on accounting treatment issues raised by this model from international and domestic perspectives.
