Accounting Infrastructure Challenges Apple Faces in China in Comparison to The U.S.

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Accounting Infrastructure Challenges Apple Faces in China in Comparison to The U.S.

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Apple, China, USA United States of America, supply chain, accounting law system, Chinese market, infrastructure, accounting regulation, IFRS International Financial Reporting Standards, GAAP Generally Accepted Accounting Principles, ASBE Accounting Standards for Business Enterprises, accounting standards, CICPA Chinese Institute of Certified Public Accountants, AICPA American Institute of Certified Public Accountants, financial data, accounting information system

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Abstract

Apple, Inc. is a U.S. multinational corporation well known worldwide and highly influential. China is a critical market and the primary manufacturing base for Apple Inc. The country is integral to the organization's worldwide operations, as it manufactures and sells devices. The concentration of Apple's manufacturing and supply-chain activities in China, where Chinese partners like Foxconn build its string of devices, can be stated as the core of all its operations. Such dependency on China's manufacturing sector has allowed Apple to gain from the country's enormous base of skilled workers, low-cost production, and effective logistics networks. Promoting and universalizing Apple's operations in China is crucial for the company's financial performance as a global class. The accounting and regulatory regime specific to China poses a major challenge for Apple in maintaining the reliability and credibility of its financial reporting in the crucial Chinese market.

Introduction
Accounting Regulation and Standards in China
Professional Accounting Organizations in China
Accounting and Audit Practices in China
Recording and Reporting of Financial Data in China
Conclusion

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[...] As for the enterprises operating in China, they should have robust accounting information systems and data infrastructures that support the operations of financial transactions to provide the accurate and correct financial facts they must record and report. For these systems to operate within the area, they must comply with local regulations including Accounting Standards for Business Enterprises (ASBE), produce financial reports tribunals, and any required layouts and disclosure. Apart from that, businesses should ensure that the way they control financial data and reporting procedures is up to the Chinese legal and regulatory framework requirements (Guo & Krever, 2022). [...]

[...] Conclusion Analyzing Apple's accounting infrastructure and challenges in China has revealed some key findings. At the same time, Chinese accounting regulation is already adapted to international standards and keeps certain national rules deviating from the U.S.'s approach. These complexities can cause problems for Apple in its efforts to demonstrate consistency and comparability in its presentation across such markets. The governing body of the accounting profession in China will involve more government agencies than a self-regulatory approach, which is widely used in the United States of America. [...]

[...] https://www.worldscientific.com/doi/abs/10.1142/S1094406022800014 Reinstein, A., Pacini, C. J., & Green, B. P. (2020). Examining the current legal environment facing the public accounting profession: Recommendations for a consistent U.S.U.S. policy. Journal of Accounting, Auditing & Finance, 3-25. https://journals.sagepub.com/doi/pdf/10.1177/0148558X16680717 Wen, W., Humphrey, C., & Sonnerfeldt, A. (2021). The strategic significance of the CICPA in the making of a Chinese home-grown public accounting profession. Accounting and Business Research, 636-676. [...]

[...] The accounting and regulatory regime specific to China poses a major challenge for Apple in maintaining the reliability and credibility of its financial reporting in the crucial Chinese market. Accounting Regulation and Standards in China Chinese accounting law system is rather complex, and all the laws and regulations determine the financial reporting procedures of the businesses operating within the territory. The primary legislation is the Accounting Law and the Accounting Standards for Business Enterprises (ASBE), supported by other Rules and Guidelines provided by the Ministry of Finance and the China Securities Regulatory Commission (Kaplan & Hazar, 2020). [...]

[...] The role of the CAA is to represent the whole accounting profession, from academics to researchers and practitioners. Those who aspire to become CPAs in China must undergo a tough examination and licensing procedure that CICPA supervises. Such testing usually includes completing comprehensive exams, meeting the educational and experience requirements, and fulfilling the continuing professional education requirements. On the contrary, the U.S. accounting regulatory framework is dominated by private sector organizations, such as the American Institute of Certified Public Accountants (AICPA) and state CPA societies (Reinstein et al., 2020). [...]

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