Accounting Laws – China, Gambia & Czech

There are two types of legal systems. They are Common Law and Civil Law. Per the World Fact book, China and the Czech Republic follow the Civil Law System while Gambia practices a Mixed Law.

China: The Republic of China is the most heavily populated country in the world. They follow the Civil law Legal system. Chinese accounting standards were set when China was a socialist country. Thus asset availability was more in playing that profit and loss. The Ministry of Finance requires companies to following the China GAAP. China has experienced exponential growth and foreign capital investment in the past few decades. Previously companies maintained multiple sets of books to abide with the Chinese GAAP, for taxes and their foreign investors. To simplify the reporting China has amended its GAAP making it in line with IFRS requirement.

Czech Republic: The Czech Republic is a small, yet stable European nation. The Czech Republic follows the Civil Law structure. The Accounting standards are prepared by the Ministry of Finance of the Czech Republic. All publicly traded companies are required to prepare their financial statements in accordance to the International Financial Reporting Standards (IFRS). While tax laws are in accordance with Czech regulations companies are required to maintain their book-keeping with Czech standards. Thus it appears to me that publicly traded companies have to abide by the IFRS and Czech accounting standards. Private companies are not allowed to voluntarily transition to IFRS, infact they are required to abide to the Czech Accounting standards.

Gambia: Gambia is located in Western Africa. It gained independence from the British in 1965. More than 98% of the population in Gambia is Muslim. The country practices a mixed legal system which comprises of English common law, Islamic Law and Customary law. The Gambian fiscal processes are weak and have a number of loopholes. Gambia previously operated on the Companies Act while IFRS compliance was optional. As off 2009, IFRS is mandatory. Gambia is in the phase II of IFRS adoption.