Comparative Study Of Commercial Accounting Rules And Their History Between Taiwan And China

In light of the frequent transactions of business between the two sides of the Taiwan Strait, investment from Taiwan on the mainland has been increasing at all times. Among all other services to business functions, accounting has been extensively valued under the objective environment. In this paper, the commercial accounting systems on the two sides of the Taiwan Strait will be discussed and compared. Analysis on the variations between the two systems will be conducted and the findings are expected to serve as a reference for the businesses on the mainland of Taiwan origin, the accounting profession and those who have an interest in the topic.As an introduction to this paper, the variations between the political and economic systems of Mainland China and Taiwan will be discussed. It will be followed by the study on the legal structure of the accounting system, the legislative process and sources of legislation, scope of application, gravity of regulation, and controversy in the system. Interviews will be conducted with the business circle and the accounting profession to find out the extent to which the accounting system has been enforced.The development of the economic and political systems in Mainland China and in Taiwan are different. In Taiwan, the "capitalist market economy" has been unfolded hand in hand with the change of the economic mode of a lively and viable market mechanism. Therefore, the accounting reform in Taiwan was kicked off much earlier. Currently, the accounting profession in Taiwan has been developed to a mature stage. In Mainland China, economic reform came much later. Yet, she has established the legacy of a "Socialist Market Economy" under which innovation has been made and different supporting systems for market economy have come into place. This is indeed the manifestation of the determination of the leaders in the mainland in economic reform. The characteristics of the accounting systems in Mainland China and Taiwan and relevant legal rules are described as follows with recommendations:The characteristics of the legal rales governing commercial accounting in Taiwan:1. The legislative process is rigid and is yet to be improved.2. The mode of business organization determines the applicability of different sets of legal rules in accounting.3. The primary purpose is on the "reliability" of accounting information.4. The controversy over various issues has significant influence on the system.5. No proper understanding and lack of effort in enforcement.The characteristics of the accounting legal rules in Mainland China:1. All accounting processes must be in conformity with the accounting law.2. Both the reliability of accounting information and the accounting practice are strictly regulated.3. Ineffective in the removal of false accounts.Recommendations to practice of commercial accounting in Taiwan:1. Improvements or amendments shall be made on the inadequacy of accounting rules; the critical part will be discussed in Chapter VI and VII on accounting principle.2. Competent authority shall properly enforce the new laws on accounting.3. Education on the public on the importance of accounting information.Recommendations to the practice of commercial accounting in Mainland China:1. The rule of law on accounting shall be properly instituted to map out the priority of competent authority in this domain.2. Education on accounting law and relevant legal rules and proper enforcement of the laws.3. Persist to align with international accounting practice.4. Coordinate the variation between different accounting systems.