Some people still think in China we have too complicated an accounting system including a corporate accounting system and also distinctive accounting systems for different industries. For instance, some corporate accounting rules require enterprises to build value-loss reserves based on the recoverability of assets.
Although accounting rules of different industries have similar requirements, they are all inadequate in terms of soundness comparing to corporate accounting rules. Another issue is that, since we did not have the luxury of a strong accounting industry and external auditing facilities, when banks assessed the reliability of enterprises’ financial information, they did not require borrowers to provide external auditing results.