China
Accounting
Alert
January 2019
This edition of China
Accounting Alert provides
news and updates about
IFRS, financial reporting in
Mainland China and EY
publications.
IASB news and updates
► IASB Update for December 2018
The December 2018 issue of the IASB Update contains the IASB staff summary of the
IASB meeting held on 11 and 13 December 2018 when the board discussed:
► Insurance Contracts
► Updating a Reference to the Conceptual Framework (Amendments to IFRS 3)
► Provisions
► Dynamic Risk Management
► Business Combinations under Common Control
► Primary Financial Statements
► Research Program
► Pension Benefits
► IBOR Reform and its Effects on Financial Reporting
► Rate-regulated Activities
► Disclosure Initiative: Accounting Policies
► Implementation matters—Accounting Policy Changes
Mainland news and updates
► MOF issues Notice on Issuing the Revised Presentation
of Financial Statements for Financial Institutions for
2018 (Cai Kuai [2018] No. 36)
The Ministry of Finance (MOF) has issued Notice on
Issuing the Revised Presentation of Financial Statements
for Financial Institutions for 2018 (Cai Kuai [2018] No. 36)
(the “Notice”) to provide further guidance on the
presentation of financial statements for financial
institutions. The revision is based on the new changes in
Accounting Standards for Business Enterprises, such as
the new financial instrument standard, the new revenue
standard, the standard on government grants and the
standard on assets held for sale, and their implementation.
According to the Notice, financial institutions are:
1. required to prepare financial statements in
accordance with Accounting Standards for Business
Enterprises and the requirements of the Notice if
they have adopted both of the new financial
instrument standard and the new revenue standard;
2. required to prepare financial statements with
reference to the Notice if they have adopted the new
financial instrument standard but not yet adopted the
other new standards; and
3. not required to apply the requirements of the Notice
if they have adopted the other new standards but not
yet adopted the new financial instrument standard.
Presentation of Financial Statements for Financial
Institutions for 2018 (the “Revision”) revises and adds
new presentation requirements for financial institutions
based on the new changes in Accounting Standards for
Business Enterprises. According to the Revision, the
carrying amounts of some items of financial assets
included in the financial statements may reflect multiple
measurement bases, and the accounting dimensions of
some accounts may also change. Presentation items that
do not correspond to the businesses of the financial
institutions can be removed according to the principle of
materiality and the actual circumstances, and if necessary,
new presentation items can be added for separate
presentation.
Financial institutions adopting the requirements of the
Notice are no longer required to present financial
statements under Accounting Standard for Business
Enterprises – Application Guidance (Cai Kuai [2006] No.
18) issued by the MOF on 13 October 2006.
China Accounting Alert
► MOF issues Notice of the Ministry of Finance on Issuing
the Revised Presentation of Consolidated Financial
Statements for 2018 (Cai Kuai [2019] No. 1)
For the phased implementation of the new financial
instrument standard and the new revenue standard
starting 1 January 2018, the MOF has issued Notice of the
Ministry of Finance on Issuing the Revised Presentation of
Consolidated Financial Statements for 2018 (Cai Kuai
[2019] No. 1) (the “Notice”) following Notice of the
Ministry of Finance on Issuing the Revised Presentation of
Financial Statements for General Business Enterprises for
2018 (Cai Kuai [2018] No. 15) and Notice of the Ministry
of Finance on Issuing the Revised Presentation of
Financial Statements for Financial Institutions for 2018
(Cai Kuai [2018] No. 36).
The Notice is applicable to business groups which have
applied the new financial instrument standard and the new
revenue standard. Only the revision of the presentation of
consolidated financial statements is included in the
appendix Presentation of Consolidated Financial
Statements for 2018 to the Notice. The revised
presentation format and related items are applicable to
the parents and their subsidiaries which engage in various
operations, including general business enterprises,
commercial banks, insurance companies and securities
companies, etc. New presentation items can be added for
separate presentation by an enterprise according to the
principle of materiality and the actual circumstances if
necessary; presentation items that do not correspond to
its business can be removed. For business groups which
mainly consist of financial institutions, consolidated
financial statements should be prepared based on the
presentation of financial statements for financial
institutions, with adjustments to related items in order to
be in companies with the presentation of financial
statements for general business enterprises and the
requirements of the Notice.
In addition, the Accounting Department of the CSRC has
proposed Special Provisions on Preparation of Notes to
Financial Statements for Securities Companies (2018) (the
“Provisions”) (Kuai Ji Bu Han [2018] No. 590) based on
Presentation of Financial Statements for Financial
Institutions for 2018 issued by the MOF. The Provisions
are applicable for the annual disclosure of securities
companies that have adopted the new financial instrument
standard, and provide detailed guidelines and templates
for purposes such as the collective disclosure of financial
instruments with different measurement bases.
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► Shanghai Stock Exchange releases and revises
Guidelines on Industry Information Disclosure for Listed
Companies of Certain Industries
Recently, the Shanghai Stock Exchange has released
Circular on Issuing Guidelines on Industry Information
Disclosure for Listed Companies No. 21-28 and Revising
Guidelines on Industry Information Disclosure for Listed
Companies of Certain Industries to provide guidance on
the disclosure of listed companies’ operating information,
including specific guidelines for integrated circuit industry
and other seven industries and revised specific guidelines
for electric power industry and other three industries:
1. Shanghai Stock Exchange Guideline on Industry
Information Disclosure for Listed Companies No.21 -
Integrated Circuit
2. Shanghai Stock Exchange Guideline on Industry
Information Disclosure for Listed Companies No.22 -
Aviation, Shipping and Railway Transportation
Equipment Manufacturing
3. Shanghai Stock Exchange Guideline on Industry
Information Disclosure for Listed Companies No.23 -
Medical Devices
4. Shanghai Stock Exchange Guideline on Industry
Information Disclosure for Listed Companies No.24 -
Food Manufacturing
5. Shanghai Stock Exchange Guideline on Industry
Information Disclosure for Listed Companies No.25 -
Gold and Jewelry Accessories
6. Shanghai Stock Exchange Guideline on Industry
Information Disclosure for Listed Companies No.26 -
Film and TV Series
7. Shanghai Stock Exchange Guideline on Industry
Information Disclosure for Listed Companies No.27 -
Furniture Manufacturing
8. Shanghai Stock Exchange Guideline on Industry
Information Disclosure for Listed Companies No.28 –
Non-ferrous Metals
9. Shanghai Stock Exchange Guideline on Industry
Information Disclosure for Listed Companies No.4 -
Electric Power (Revised in 2018)
10. Shanghai Stock Exchange Guideline on Industry
Information Disclosure for Listed Companies No.7 -
Pharmaceutical Manufacturing (Revised in 2018)
11. Shanghai Stock Exchange Guideline on Industry
Information Disclosure for Listed Companies No.11 -
Photovoltaic (Revised in 2018)
12. Shanghai Stock Exchange Guideline on Industry
Information Disclosure for Listed Companies No.12 -
Garments (Revised in 2018)
The above guidelines take effect on 1 January 2019.
China Accounting Alert
► Shanghai Stock Exchange issues Notice on the
Preparation of Disclosure of 2018 Annual Reports of
Listed Companies
In order to improve the preparation of disclosure of 2018
annual reports of listed companies, the Shanghai Stock
Exchange has issued Notice on the Preparation of
Disclosure of 2018 Annual Reports of Listed Companies
(the “Notice”), requiring listed companies and auditors to
perform their duties diligently and effectively improve the
truthfulness and effectiveness of disclosure of annual
reports. The requirements for disclosure of key financial
information of annual reports cover the following six
topics:
1. Goodwill impairment: Involve reasonable judgement to
identify any indication of impairment, conduct
impairment testing of goodwill in a timely manner,
and evaluate the reasonableness of impairment
testing carefully in accordance with Accounting
Regulatory Risk Alerts issued by the CSRC.
2. Matters relating to the implementation of new
Accounting Standards for Business Enterprises: Focus
on the applicability and implementation of the new
financial instrument standard and the new revenue
standard.
3. Misappropriation of funds and external guarantees:
Focus on the decision-making procedures and
information disclosure of issues such as fund
transfers and external guarantees between listed
companies and their related parties.
4. Transactions using the shotgun approach: Pay high
attention to the economic substance, decision-making
procedures, accounting treatment and disclosure of
transactions related to the divestment of loss-making
assets or disposal of non-operating assets, debt
restructuring, changes in accounting policies and
accounting estimates, correction of errors made in
prior period, provision for or reversal of asset
impairment, significant related party transactions,
sales using the shotgun approach and other
transactions and issues.
5. Changes in accounting policies and accounting
estimates or correction of material accounting errors:
Provide information disclosure, audit or special
assurance services in accordance with Standards for
the Preparation of Annual Reports and Compilation
Rule for Information Disclosure by Companies Offering
Securities to the Public No. 19 - Correction of Financial
Information and Related Disclosure (Revised in 2018).
6. Matters relating to audit: Focus on information
disclosure of key audit matters and modified audit
opinions.
3
 The Notice also includes requirements for disclosure of
key non-financial information in annual reports, covering
11 topics, such as the pledge and freeze of controlling
interests and interests of actual controllers, corporate
governance, sub-industry information disclosure, and
sustained information disclosure of mergers, acquisitions
and restructuring.
In addition, the Shanghai Stock Exchange and Shenzhen
Stock Exchange have issued Notice on the Preparation of
Disclosure of 2018 Annual Reports of Bond Issuers and
Notice on Matters relating to the Preparation of Disclosure
of 2018 Annual Reports of Bond Issuers, respectively,
requiring corporate bond issuers to effectively improve
the preparation, submission and disclosure of 2018
annual reports.
► NEEQ releases guidelines on industry information
disclosure for professional and technical services
industry and other three industries
The National Equities Exchange and Quotations (NEEQ)
has recently released Announcement on Releasing
Guidelines on Industry Information Disclosure for
Professional and Technical Services and Other Three
Industries to provide guidance on the preparation of and
information disclosure in public transfer statements,
annual reports and interim reports of companies listed on
the NEEQ, including the guideline on information
disclosure for the public transfer statements and the
guideline on sustained information disclosure for four
industries, i.e., professional and technical service industry,
retail industry, Internet and related service industry and
computer, telecommunications and other electronic
equipment manufacturing industry. The guidelines take
effect on 4 January 2019. Among these guidelines, the
guideline on information disclosure for the public transfer
statements is applicable to the companies applying for
NEEQ listing and the guideline on sustained information
disclosure is applicable to the companies listed on the
Innovation Market of the New Third Board while the
companies listed on the Basic Market of the New Third
Board are also encouraged to follow.
China Accounting Alert
► NEEQ releases Notice on the Preparation of Disclosure of
2018 Annual Reports of NEEQ-listed Companies
Recently, the NEEQ has released Notice on the
Preparation of Disclosure of 2018 Annual Reports of
NEEQ-listed Companies (the “Notice”) to enhance the
disclosure of 2018 annual reports of NEEQ-listed
companies. Preparers of annual reports are required to:
1. Use differentiated templates for disclosure of annual
reports
NEEQ-listed companies are required to prepare their
annual reports with templates applicable to the
markets on which they are listed and the industries in
which they operate (including the templates for
disclosure of annual reports of general business
enterprises listed on the Innovative Market and the
Basic Market of the New Third Board, and commercial
banks, securities companies and other six types of
financial companies).
2. Apply guidelines on industry information disclosure
Companies from software and information technology
services, pharmaceutical manufacturing,
environmental governance and other industries,
which are listed on the Innovation Market of the New
Third Board, are required to fulfill their obligations
related to information disclosure of annual reports
and disclose operating information in accordance with
the guidelines on sub-industry information disclosure.
Companies listed on the Basic Market of the New
Third Board are encouraged to make voluntary
disclosures.
3. Provide special disclosure of the private fund business
NEEQ-listed companies, which are not registered as
private fund managers but their subsidiaries in the
scope of consolidated financial statements are
registered as private fund managers, are required to
provide special disclosure of the private fund business
of such subsidiaries in Section IV “Management’s
Discussion and Analysis” with reference to the
content and format of “disclosure of special
information” in the template for annual reports of
private equity managers.
4
EY publications
► IFRS Developments Issue 139: Physical settlement of
contracts to buy or sell a non-financial item
The IFRS Interpretations Committee discussed the
physical settlement of contracts to buy or sell a non-
financial item under IFRS 9 Financial Instruments. It
tentatively concluded that IFRS 9 neither permits nor
requires an entity to reverse any gain or loss from
remeasuring the contracts recorded prior to settlement.
Further details about the discussion are found in EY’s IFRS
Developments Issue 139.
► IFRS Developments Issue 140: Revenue earned before
an asset is ready for its intended use
In November 2018, the IASB decided to proceed with
amendments to IAS 16 Property, Plant and Equipment,
incorporating certain modifications to the exposure draft
issued in June 2017, in respect of the identification of
costs related to revenue generated before an asset is
available for its intended use.
The Board also plans to propose further changes to
disclosure and presentation requirements. Further details
about the amendments are found in EY’s IFRS
Developments Issue 140.
► Applying IFRS: A closer look at IFRS 16 Leases
This edition of Applying IFRS on IFRS 16 Leases includes
changes to address evolving implementation issues. It
analyzes the standard and discusses the implementation
issues. It also provides a comparison to the new US GAAP
standard on leases.
It is intended for use by entities that are in the process of
adopting IFRS 16 and those that have already adopted it.
China Accounting Alert
► Applying IFRS: Impairment considerations when applying
the new leasing standard (IFRS 16)
IFRS 16 Leases requires lessees to record a right-of-use
asset and a lease liability for most lease arrangements in
their financial statements. They will also be subject to the
impairment requirements of IAS 36 Impairment of Assets.
Learn more about the practical considerations of the
interaction between IFRS 16 and IAS 36.
IFRS 16 is effective for annual periods beginning on or
after 1 January 2019, with limited early application
permitted.
► IFRS Update of standards and interpretations in issue as
at 31 December 2018
This edition of IFRS Update is an overview of upcoming
changes in standards and interpretations issued by the
IASB and the IFRIC as at 31 December 2018 that will be
effective for the first time for reporting periods ended at
that date or thereafter. It also summarizes key features of
selected IASB projects and recent IFRIC agenda decisions.
► Good Mining (International) Limited - Illustrative
consolidated financial statements (December 2018)
Good Mining (International) Limited is a set of illustrative
financial statements specific to the mining industry for
the year ended 31 December 2018. It was prepared in
accordance with IFRS issued as at 30 September 2018.
5
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All Rights Reserved. China Accounting Alert is our monthly executive update for Mainland
APAC No. 03007860 China and Hong Kong on recent developments in local and
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