From Caijing Online

As year end approaches, China's PE firms are left wondering what accounting standards to use for year-end reporting.



By staff reporter Song Yanhua
From Caijing Online



Private equity (PE) fund managers have not been given any clear guidelines on what accounting standards to adopt for their year end financial statements. The PE industry was left out of the new accounting standards defined January 2007 by the Ministry of Finance,doudoune moncler, and as yet no other standard has officially been announced.



According to international practices, except for listed PE firms,moncler pas cher, accounting standards are decided by fund managers and investors. Compared with industrial companies,moncler, P.E. firms have relatively simple accounts, consisting mainly of investment income and expense.



Institutional investors,louboutin chaussure, including National Security Funds,christian louboutin pas cher, want PE firms to adopt the new accounting standard. Made effective in January 2007, the new accounting standard is applied to all listed companies.



Compared with the old accounting standards, the new standards introduce the pricing of assets according to fair value, meaning that if equity investments are considered as a trading financial asset or financial assets available for sale,christian louboutin, they will be reported on the income statement as well as the balance sheet. This leads to more volatility in the books and improved ability to discriminate between companies’ financial performance.



As no specific standards have been set related to what accounting standards to adopt for P.E. firms, it is very likely that accounting standards are not unified. This may make it difficult to make meaningful cross-industry comparisons of company performance.


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