This paper re-considers the notion of ‘comparability’ as it has been applied to the accounting standard harmonisation project and its implications for accounting practices that are emerging in China. Comparability is a concept that has been widely referred to within the accounting literature, but has remained largely unexplored. In order to encourage what Zeff (2007) described as “genuine comparability” we argue that the underlying economic substance of an event should be the focus of our accounting choices in order to enable appropriate comparisons. If we focus too heavily on regulatory standardisation that prescribes comparable techniques without considering the broader economic context in which these are applied, the accounting representations could mislead users. The techniques may distort representations of the underlying economic substance of business activities, which would hinder the level of a genuine comparability in global financial reporting. In order to explore this, given the unique legal status of land in China, we consider how it is classified and represented in Chinese financial reports. This example shows that there are still significant challenges that need to be overcome in order to implement IFRS in China and there are still substantial comparability problems for cross-border users.
Recommended CitationZhang, Y. and Andrew, J., Land in China: Re-considering comparability in financial reporting, Australasian Accounting, Business and Finance Journal, 4(1), 2010, 53-75.