I. The following procedures are designed to further improve the transparency of setting accounting standards, and to ensure solicit comments and recommendations from the society extensively in setting accounting standards.
II. The Accounting Regulatory Department of the Ministry of Finance (the "Accounting Department") is responsible for drafting accounting standards. The Accounting Department adopts a responsibility system where drafting teams are set up and are responsible for different projects. In principle, a drafting team is a division under the Accounting Department and should invite other relevant people to participate.
III. During the drafting process of accounting standards, the drafts of standards include discussion papers, exposure drafts, draft standards and draft standards for final review.
IV.The process of setting accounting standards consists of four stages: initiating a new project, preparing exposure draft, soliciting public comments and releasing the accounting standard. (I)Initiating a new project The Accounting Department initiates new projects of accounting standards according to the needs of the Chinese economic development, and solicits comments from members on the Accounting Standards Committee and other related parties. The Accounting Department should prepare documentation for a new accounting standard project in which the explanation of the background and reasons for launching the project should be provided.
Based on the comments and recommendations from the Accounting Standards Committee and other related parties, the Accounting Department should amend or adjust the documentation for initiating the project. The revised documentation should be submitted to the leaders of the Ministry of Finance according to the prescribed procedures for approval. The project will be formally launched after approved by the Ministry.
The Accounting Department should report to the Accounting Standards Committee about the progress of the project and announce to the public once it is approved.
The Accounting Standards Committee should set up a project research team to conduct research and prepare a research report based on the approved accounting standards projects and the content of the project.
(II)Drafting of exposure draft Once a new accounting standard project is approved, the Accounting Department should promptly set up a drafting team, and report to the Accounting Standards Committee about members on the team and other relevant matters.
The drafting team should promptly put forward the work plan and timetable for the project that it is held responsible. The drafting team should prepare a discussion paper on the basis of the research report and field investigation. The Accounting Department should present the discussion paper to the Accounting Standards Committee for comments. The drafting team should then amend the discussion paper accordingly and issue an exposure draft.
(III)Soliciting public comments The Accounting Department should distribute the exposure draft to the financial departments or financial bureaus of the provinces, autonomous regions, municipalities directly under the central government and separate planning cities as well as related departments under the State Council. The Accounting Department should also solicit comments extensively from the public through publishing the exposure draft on the website of the Accounting Standards Committee and other major media, and through holding symposiums and workshops.
The drafting team should put together comments received from the public and revise the exposure draft to incorporate the feedback. Then, the Accounting Department should submit the draft standard to the Accounting Standards Committee for further review.
(IV)Releasing the accounting standard The drafting team should revise the draft standard again based on the comments from the Accounting Standards Committee and prepare a draft standard for final approval. Then, the Accounting Department should submit the final draft standard to the leaders of the Ministry of Finance for approval according to prescribed procedures. Once it¡¯s approved, The Ministry of Finance will release the standard for practical implementation.
V.When there are significant amendments to existing accounting standards that have already been released, the same procedures prescribed above should be followed.
VI.The procedures become effective when they are issued by the Ministry of Finance.