Accounting Standards of Chinese Mainland and HKSAR Maintain Continuous Convergence in 2021

In September 2021, after full communication and coordination between Ministry of Finance and the Hong Kong Institute of Certified Public Accountants, Hong Kong recognized that the Accounting Standards for Businesses Enterprises, revised and issued by the Chinese mainland in the past year, including Insurance Contracts standard, Interpretation No.14 and the Guidance on Accounting For COVID-19-Related Rent Concessions, are converged with the Hong Kong Financial Reporting Standards, which adopt the International Financial Reporting Standards.

Since the mutual recognition of accounting standards between the Chinese mainland and Hong Kong in 2007, the two sides have kept timely exchanges in their progress in accounting standards setting and international convergence every year to maintain the continuous convergence of accounting standards.

The continuous convergence of the accounting standards of the two sides is conducive to reducing the cost of financial statement preparation for companies financing in each other’s capital markets.

It creates a good accounting environment for mainland enterprises’ "go global" strategies, the smooth operation of the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect programs, and the interconnectivity of the bond markets in the Chinese mainland and Hong Kong, and promotes the common development of the capital markets located in both sides.