Accounting with heart chinas role in international finance and business

E1FFIRS 01/21/2010 10:18:46 Page ’ E1FFIRS 01/21/2010 10:18:47 Page ’ John Wiley & Sons (Asia) Pte Ltd E1FFIRS 01/21/2010 10:18:47 Page Copyright 2010 Wang Jun Published in 2010 by John Wiley & Sons (Asia) Pte Ltd Clementi Loop, #02-01, Singapore 129809 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherw ise, ex cept as ex pressly permitted by law , w ithout either the prior w ritten permission of the Publisher, or authorization through payment of the appropriate photocopy fee to the Copyright Clearance Center Requests for permission should be addressed to the Publisher, John Wiley & Sons (Asia) Pte Ltd., Clementi Loop, #02-01, Singapore 129809, tel: 656463-2400, fax : 65-6463-4605, e-mail: enquiry@w iley.com This publication is designed to provide accurate and authoritative information in regard to the subject matter covered It is sold w ith the understanding that the publisher is not engaged in rendering professional services If professional advice or other ex pert assistance is required, the services of a competent professional person should be sought Neither the authors nor the publisher are liable for any actions prompted or caused by the information presented in this book Any view s ex pressed herein are those of the authors and not represent the view s of the organizations they w ork for Other Wiley Editorial Offices John Wiley & Sons, 111 River Street, Hoboken, NJ 07030, USA John Wiley & Sons, The Atrium, Southern Gate, Chichester, West Sussex , P019 8SQ, United Kingdom John Wiley & Sons (Canada) Ltd., 5353 Dundas Street West, Suite 400, Toronto, Ontario, M9B 6HB, Canada John Wiley & Sons Australia Ltd, 42 McDougall Street, Milton, Queensland 4064, Australia Wiley-VCH, Boschstrasse 12, D-69469 Weinheim, Germany Library of Congress Cataloging-in-Publication Data ISBN 978-0-470-82570-9 (Paperback) ISBN 978-0-470-82601-0 (Hardback) Typeset in 10.5/13pt Sabon-Roman by Thomson Digital Printed in Hong Kong by Printplus Limited 10 E1FTOC 12/04/2009 10:22:49 Page C O N T EN T S Fo rewo rd Helen Brand, Chief Executive, Asso ciatio n o f Chartered Certified Acco untants Sir David Tweedie, Chairman, Internatio nal Acco unting Standards Bo ard vii Intro ductio n xi ix Recharging Y ourself to Face the Challenge ‘‘Uphold Morality on Strong Shoulders and Create Brilliant Writings w ith a Fine Hand’’ 27 Making Y our Writings More Citable and Y our Students More Useful to Society 51 Honesty is the Core of Integrity; Aw akening is the Prerequisite to Achievement 71 Innovative Thinking and the Pursuit of Ex cellence 87 A Good Essay is the Result of Good Subject Matter; Steady Progress is the Result of Strong Resolve 105 Studying Philosophy: Clear Directions at a Glance 109 Studying Classics for Enlightenment 135 Appendix 187 Index 191 v E1FLAST 12/04/2009 13:18:25 Page FOR EWOR D On behalf of the Association of Chartered Certified Accountants (ACCA), I am delighted to congratulate Dr Wang Jun on his first international publication, w hose inspiring w ritings deserve a w ider audience As Vice Minister of Finance, Wang Jun has played an historic part in the development of the Chinese accountancy profession In 1988, he took a leading role in the creation of the Chinese Institute of Certified Public Accountants (CICPA), marking the beginning of a new era for the nation’s profession Since then, through promoting convergence betw een Chinese and international accounting standards, Wang Jun has enabled the accountancy profession in China to take its rightful place on the global stage By advocating the importance of sharing a common understanding of accounting language and principles, he has made a profound contribution to China’s international standing and the success and stability of its economy In 2008, ACCA w as honored to pay tribute to tw o decades of remarkable achievement by CICPA and pledge its continued support for the Chinese profession, the Ministry of Finance and influential leaders such as Wang Jun under the theme of Partners in Pro gress To coincide w ith the publication of this volume, ACCA is recognizing Wang Jun’s personal contribution to this effort w ith a unique ‘‘Outstanding Innovation and Leadership Aw ard.’’ A thinker as w ell as a man of action, Wang Jun is rightly celebrated across China for the range of his vision and the poetry of his w ords In the w estern w orld, the ex amination of business and finance can often be a dry ex ercise Wang Jun show s, through this ex traordinary collection of w ritings, both the breadth of his w orld view and the connections w hich surely ex ist betw een finance, the arts, spirituality and culture His is a visionary voice, w hich takes the reader beyond the normal realm of finance discourse vii E1FLAST 12/04/2009 viii 13:18:25 Page FOREWORD As the global economy develops, new models for grow th and economic sustainability have emerged China’s astonishing success is an outstanding ex ample of w hat is a new w orld order In understanding the contribution that China’s accounting profession has made to its ex traordinary economic progress, Wan Jun’s w ritings are a fascinating place to begin Helen Brand Chief Executive Asso ciatio n o f Chartered Certified Acco untants E1FLAST 12/04/2009 13:18:25 Page FOREWORD ix Wang Jun, in his role as China’s Vice Minister of Finance in recent years and as Secretary-General of the China Accounting Standards Committee, has been at the center of his country’s remarkable advances in financial reporting and accounting It has been my pleasure, as Chairman of the International Accounting Standards Board (IASB), to get to know Wang Jun both personally and professionally Serious contacts betw een our tw o organizations began over four years ago By that time China had already embarked on a path tow ards convergence of its ow n accounting standards for business enterprises and the IASB’s International Financial Reporting Standards (IFRSs) In the previous year China had published ex posure drafts of a general basic standard and 20 specific standards and had begun a review of its ex isting 16 standards A series of meetings betw een IASB staff and the Ministry of Finance w as follow ed by a high level meeting in Beijing, co-chaired by Wang Jun and myself, in November 2005 The meeting w as attended by leading Chinese officials and by three other IASB members and tw o IASB directors At the meeting the IASB team applauded and ex pressed our sincere admiration for the enormous progress already made tow ards convergence, and agreed to assist China in its w ork on convergence For its part China agreed to assist the IASB in researching and developing recommendations on a number of accounting issues that w ere of particular relevance to that country’s unique circumstances and environment I am happy to record that since that meeting the IASB has continued to strengthen its ties w ith China and to move forw ard in a spirit of cooperation w ith the Chinese accounting community As Wang Jun appreciates very w ell, accounting standards are only one of the essential elements in establishing a modern economy w ithin the global marketplace Standards w ill have no effect unless they have the support and understanding of a w ell-trained accounting profession, inspired by the highest professional ideals and skills and able to ensure that standards are applied thoroughly and consistently I have observed w ith admiration the energy and determination w ith w hich the Ministry of Finance, under Wang Jun’s w ise leadership, has promoted the development of such a cadre of professionals If China, rapidly becoming one of the w orld’s leading economies, is now equipped w ith the accounting tools and skills to take its rightful place on the global business stage, it is largely a tribute to the vision E1FLAST 12/04/2009 x 13:18:25 Page 10 FOREWORD and leadership of my colleague Wang Jun I am delighted that the publication of this book w ill enable an international audience to hear him speak for himself David Tweedie Chairman Internatio nal Acco unting Standards Bo ard E1FLAST01 12/03/2009 8:55:47 Page 11 IN T R O D U C T IO N In recent years, the Chinese accountancy profession has ex perienced an unprecedented period of great grow th, change and development as it serves better the requirements of an era of reform and opening up An old Chinese saying, ‘‘The w ay to govern is through w inning people over,’’ speaks of the urgent need to build accounting talent that is globally-minded, has a firm grip on the law , and is innovative, in order to promote the cause of China’s accounting reform and development strongly and continually This book is a collection of some of my research on the issue of training senior talent in the Chinese accountancy profession It outlines my thoughts on this issue and on the promotion of the development of the Chinese accountancy profession I hope that it w ill reveal a small part of the colorful development of China’s economy and accountancy profession, and that it w ill connect w ith readers, draw ing resonance, reflection and inspiration My gratitude ex tends to everyone w ho cares about China and the accountancy profession! Wang Jun November 6, 2009 xi E1C01 12/03/2009 15:48:54 Page Accounting with Hearth: China’s Role in International Finance and Business By Wang Jun Copyright© 2010 Wang Jun Chapter Recharging Y ourself to Face the Challenge I am very happy to have the opportunity today to talk about the issues facing on-the-job graduate students I’d like to begin not by talking about any particular major principle but by sharing w ith you my ow n ex perience as a w orking graduate student and the result of my studies, in the hope that this may serve to inspire and help you In preparing for this occasion, I w rote dow n an initial draft of my speech and show ed it to my daughter, a third-year student at Peking University, to get her opinion Before she read it, and not appreciating the decades of history betw een me and this school, she w as a little skeptical that I should have anything to say After reading the draft, how ever, she had changed her mind and w as, in fact, a little upset that she felt unable to ex press herself as w ell ‘‘Even w hen I have some overw helming feelings, w hy can I not w rite them dow n on paper like this? ’’ she asked I thought about this for a minute before replying, ‘‘Because happy things happen to you one after another w hen you are at such a young age; you have so much happiness that you become inured to it Also, your pen and your soul have not yet w orked together long enough to create a good fit; only those w ho have ex perienced hardship are able to make them fit w ell Y ou are still in school, so of course you have not had the chance to ex perience different lifestyles and realize the sw eetness of student life by comparison Y ou can see how cozy school is only w hen you have left it; and you only realize more profoundly the E1C08 12/03/2009 178 16:19:53 Page 178 ACCOUNTING WITH HEART Zhuge Liang in his Xin Shu said, ‘‘Diligently attracting a hero’s heart is essential in the army.’’ Courage has alw ays been a key quality in elite personnel The ‘‘courage’’ mentioned in The Art o f War is a courage of the spirit, courage based on strategy, and not everyday courage This kind of courage is needed to lead a team w ell, and to spearhead the trends in the profession It is necessary for firm decisionmaking at crucial moments, and to face the consequences of the decision This kind of courage is not reckless; it is based on planning The principles in the classics lay the groundw ork for establishing sound practice or research into academic theories, and for grasping the essence of things in the face of today’s complex and rapidly changing circumstances In practice, it takes a qualitative leap to discover the nature of things from appearances, something w hich people w ho are unable to grasp principles find difficult to A short story from Guanzi illustrates this point: One day, Duke Han of Qi said to Minister Guan Zhong, ‘‘A few days ago, I w as at the hunting ground, w hen suddenly a fierce tiger jumped out, and after ex changing a few glances w ith the horse I w as riding, quietly slipped aw ay Don’t you find it strange? ’’ Minister Guan Zhong replied, ‘‘According to legend, there w as a tiger-eating beast, know n as the Jun, w hich bore a deep resemblance to a horse Was the sun behind your Highness at that time? ’’ The Duke said, ‘‘Y es, it w as! ’’ Guan Zhong said, ‘‘As the tiger w as looking into the sun, the horse looked like Jun, w hich is w hy the tiger backed aw ay in fear.’’ This story, though brief, pointed out a profound truth Appearance can be deceptive but if w e are able to look beyond to study and grasp the essence, w e w ill become w ise in the long run and shine in our leadership Strict discipline is alw ays essential to maintain regular order and sustainable development in any organization Without it, an organization or team w ould be like scattered sand, fighting their ow n battles and losing their w ay Early records of this can be found in China’s traditional history, culture and classics The Bo o k o f Histo ry says, ‘‘There w as a great battle at Kan, and the king had called together six nobles The king said, ‘Y ou w ho obey my orders, shall be rew arded before my ancestors; and you w ho disobey my orders, shall be put to death together w ith your children.’’’ US General George Patton, a classic military character and a prominent figure in the Second World War, also knew the importance of discipline He once said: ‘‘Discipline is an important factor for E1C08 12/03/2009 16:19:53 Page 179 Studying Classics for Enlightenment 179 maintaining the combat effectiveness of troops, and also a basic safeguard to max imize the potential of the soldiers Therefore, discipline should be deep-rooted, and it has to be stronger than the intensity of w ar and the terrible nature of death.’’ There w as no room for individualism in the military, he cautioned; only discipline—w hich w as an important reason for his success The Communist Party of China, w hich has led the Chinese people to victory time and again, also uses iron discipline as protection In the Jinggangshan period, the great man Mao Zedong personally scripted and issued a classic book of discipline Entitled Three Main Rules o f Discipline and Eight Po ints fo r Attentio n, it is still shining the light of w isdom on us to this day By absorbing the w ords and actions of such characters and using them to manage a team w ell, w e w ill ex perience success The w ords of X unzi in his letter Q uanxue (Encourage Learning) are w orth bearing in mind at all times: Standing high to beckon does not lengthen the arm, but catches the attention of those far aw ay; calling in the direction of the w ind does not increase the volume, but is heard by many; riding a horse does not make one a better runner, but brings one through a thousand miles; riding a boat does not make one a sw immer, but brings one through rivers A gentleman may not be superior to others, but he is w ise in using things around him A high-talented accountant should ex cel in copying the lessons contained in the classics to enhance his skills, strengthen his principles and plant w ithin his heart the good seed of their true essence By doing so, he w ill equip himself to lead the development of the profession and contribute to the socioeconomic development of the nation Determination to create a classic: The great thing about the classic tex ts that have shaped our w orld today is the fact that they have provided a basis for great thinkers and leaders of subsequent generations to build upon and remodel their central ideas in line w ith new know ledge and the needs of the time Thus, the process of development and improvement goes on from generation to generation By studying the classics, the leading accounting talent is ex pected to develop and improve on the classics, and on the basis of that, to create new classics For ex ample, the ancient Greek philosopher Aristotle w as an outstanding student of Plato and w as the first to distinguish E1C08 12/03/2009 180 16:19:53 Page 180 ACCOUNTING WITH HEART philosophy from the other sciences of his day He created disciplines such as logic, ethics, political science and biology Works such as Physics, O n the Heavens, Meteo ro lo gy, Po litics, Rheto ric and so on have been passed dow n through the centuries and have left an indelible mark on the development of Western culture Another familiar ex ample is the six teenth-century astronomer and mathematician Nicolaus Copernicus, w hose classic w ork O n the Revo lutio ns o f the Celestial Spheres changed age-old thinking and beliefs about the w orkings of the universe and began a scientific revolution in his day His w ork w as taken further by the Italian atheist and scholar Giordano Bruno, w ho w as burned to death for challenging the established beliefs of his day The grea t ma n Ma o Zedong is a nother cla ssic ex a mple of the dyna mic a pplica tion a nd remodeling of a ccepted w isdom to forge something new a nd more a pplica ble for the specific circumsta nces of a pa rticula r time a nd pla ce Ha ving studied, a bsorbed a nd understood the cla ssic Ma rx ist tex ts, he took a nd developed their lega cy in a different direction by a pplying them to the pa rticular rea lities of China ’s revolution Revolutiona ry Ma oist thought d, a nd continues to ve, a significa nt influence on both China a nd the w ider w orld Pan X ulun, the eminent accountant, obtained a doctorate in the United States in his early years, founded the Pan X ulun Accounting Firm in 1927, and in 1928 founded Lix in Accounting School, China’s first school of accounting From his practice, Pan understood the importance of gaining trust from the community, and adopted the essence of ‘‘a nation stands on the trust of its people’’ from The Analects o f Co nfucius Lix in’s code of conduct—‘‘Integrity in building ambition, integrity in preserving oneself, integrity in dealings, integrity in treating others—alw ays build integrity, and you w ill succeed’’— became highly regarded and set the tone for the accounting profession in China Such ex amples are w orthy of our attention Certain PhD training institutes in China attach great importance to their students’ mastery of classic literature The students are often required to read dozens of classic w orks, Chinese and foreign, in their assignments to clarify the contex t in order to grasp the essence In my opinion, this is a very good style of training and education In seeking to emula te our predecessors, w e should ve a correct understa nding of history a nd of the times, a nd gra sp the la w s of E1C08 12/03/2009 16:19:53 Page 181 Studying Classics for Enlightenment 181 socia l a nd a ccounting development to set a clea r resea rch direction Toda y, w e, the lea ding ta lents in the a ccounta ncy profession, ve a dva nta ges tha t w ere not a va ila ble to our predecessors The development of the va rious disciplines of study, the progress in resea rch methods, the closeness a nd frequent communica tion in the interna tiona l community, a nd the openness of the internet ve ena bled us to recognize a nd gra sp the la w s of development more ea sily, using them to serve the times a nd society The lea ding ta lents in the a ccountancy profession, theoreticia ns a nd practitioners a like, ca n only become grea t a ccounta nts a nd trendsetters in the modern era by ta king the pulse of the times and ca pita lizing on society’s needs a nd the la w s of development We must learn from diverse sources It is necessary to absorb and store know ledge and w isdom in order to establish a broader view of accounting In order to establish practical development, technology upgrades and international cooperation that are part of the modern w orld, w e must break out of the cocoon of common prejudices by taking into consideration accounting theories, methods and results from modern, ancient, domestic and foreign sources Only by having an eager, proactive and persevering spirit to ex plore the w isdom of the w orld can w e establish the greatness of accounting in China and become a great master of modern accounting We must consciously a ssume responsibilities In a recent essay on ‘‘the commitment to a ca demic resea rch,’’ Professor Qia n Liqun set out his belief tha t w hile enga ging in a ca demic resea rch it is essentia l to ma ke ‘‘a ca demia one’s life, having a self-susta ining ex istence consisting of a ca demia w ithout the need for a nything else; w here a ca demia itself is the mea ning a nd va lue of life.’’ If w e a re to a chieve our goa ls for the a ccounting profession, it is necessa ry to ve such a group of schola rs w ho embra ce a ca demic a ccounting resea rch a s their life, such tha t rea ding, thinking, resea rching a nd crea ting become their mea ns of ex istence, permea ting into their da ily lives a nd bringing them into the long-la sting sta te of joy tha t the resea rch brings The rea l ma sters of a ccounting ca n only come into being a s these unique groups continue to grow in strength We must be bold to innovate We must nurture innovative potential and master innovative w ays Innovation is the key to national progress At an opportune time for major developments in the accountancy profession, the key to successful innovation and breakthroughs lies in the ability of individuals to master innovative w ays and put them E1C08 12/03/2009 182 16:19:54 Page 182 ACCOUNTING WITH HEART to good use In this regard, the first key is to have sharp discernment Discernment is the ability to perceive, sense and analyze know ledge, emotions and behavior and their interrelationships, and to capture and discover the desired things such as know ledge and truth This requires us to be diligent in thinking, skilled at observation, w hile maintaining a deep understanding and grasp of financial accounting issues in the socioeconomic life of the nation The second key to unleash innovative potential is to have a rich imagination Imagination is the capability to fit pieces of information into a larger, neutral picture of integrated visual images that show s their interrelationships In making classics for accounting, w e have to give full play to imagination, and focus on performing ‘‘nuclear reaction’’ on the reality of socioeconomic life With regard to innovative potential, the third key is to be decisive Decisiveness is the ability of a person to make judgments and timely decisions A person w ho hesitates to assume responsibility, to back his ideas and to take risks, and w ho fails to have an opinion of his ow n, is bound to fail in any business Decisiveness is an important factor for innovation After w atching the Beijing Olympic Games, I believe that the fourth key to max imize the innovative potential is to have a ‘‘champion mentality.’’ Great athletes, artists, scientists and even politicians, though of different fields, all display this mentality Champions alw ays pursue their dreams and are w illing to give up w orldly pleasures to w ork diligently and tirelessly; they have an unyielding spirit Though they may often fail, they refuse to be defeated by failure and w ill alw ays stand up stronger than before Champions have the courage to run ahead of the pack; they w ill not follow the beaten track, but w ill take the road less traveled to achieve breakthroughs and create a new w orld altogether The fifth key is to have superb language proficiency, of w hich I have spoken many times While on the subject of innovation, my contact w ith various university deans and professors in recent years have revealed their genuine concerns regarding the serious stagnation of national accounting education Because of this, during the first half of the first semester in our academic classes, w e paid particular attention to the study of international accounting research methods This is a very important point My hope is for every highly-talented accountant in the profession to strengthen his innovative potential through learning the classic E1C08 12/03/2009 16:19:54 Page 183 Studying Classics for Enlightenment 183 tex ts to lay a solid foundation for innovation and the making of future classics We must live above fame and fortune, get aw ay from the voices of the w orld We must w ithstand temptations and loneliness, continually nurture and retain our spiritual heritage, allow ourselves to be incubators for the classics and trailblazers on the paths less traveled and for the methods less ex plored On this point, famous lines from Wang Guow ei’s Human Wo rds and Language come to mind: The great achievers and gurus of all time must pass through three realms to achieve success The first realm says, ‘‘As the green trees w ithered in the autumn w ind of last evening, I w ent up to the tow er alone, and overlooked a road reaching the skyline.’’ The second realm says, ‘‘No regrets if my clothes become loose, if I become haggard for my lady w ho has disappeared.’’ The third realm says, ‘‘I have searched a thousand times to no avail, but all of a sudden as I turn around, I saw her under the dimmed lights.’’ Only by passing through the ex ploration and hardship of the first tw o realms w ill w e, as leading champions of accountancy, reach the ‘‘third realm,’’ ex periencing new discoveries, new inspirations, new creations, and hence attaining the highest level of accounting achievements Accounting classics are the embodiment of the development of the accountancy profession in their time Their impact is far greater than hundreds of commonplace literary products Though ex isting research and practices are highly dynamic, recognized cornerstone w orks w hich can be passed dow n to future generations are still scarce The current and continuing grow th in theoretical research and practice signals that there w ill be a corresponding increase in both the quantity and quality of w ritten materials from w hich w ill emerge more classics As leading talents in the accountancy profession, w e should be committed to using ex isting classics to remodel and create new accounting classics ‘‘Although Zhou w as an ancient state, it had a reformed mission In the midst of abundance, the old can be view ed through new lenses.’’ 22 China is currently in an important period, w ith imminent development opportunities and challenges My hope is that w e live up to the ex pectations of the times, rise up to the call of our leaders, and understand, develop, create and apply w ork that w ill become the classics of our time With our eyes set on transforming the accountancy E1C08 12/03/2009 184 16:19:54 Page 184 ACCOUNTING WITH HEART profession into a ‘‘classic’’ profession, let’s play our part in this great journey of development and reform, displaying true heroism and making history for the Chinese nation ENDNOTES Based on a speech given at the Inaugural Ceremony of the Training Program of National (Prospective) Leading Accountancy Talents, October 25, 2008 Lin Y utang (1895–1976) is a famous Chinese w riter, philosopher and translator He w rote more than 35 books and his compilations and translations of classic Chinese tex ts into English w ere bestsellers in the West After 1928, he lived mainly in the United States The relationship betw een yin and yang is often described in terms of sunlight playing over a mountain and in the valley Yin (literally the ‘‘shady place’’ or ‘‘north slope’’) is the dark area occluded by the mountain’s bulk, w hile yang (literally the ‘‘sunny place’’ or ‘‘south slope’’) is the brightly lit portion As the sun moves across the sky, yin and yang gradually trade places w ith each other, revealing w hat w as obscured and obscuring w hat w as revealed Yin is usually characterized as slow , soft, insubstantial, diffuse, cold, w et, and tranquil It is generally associated w ith the feminine, birth and generation, and w ith the night Yang, by contrast, is characterized as hard, fast, solid, dry, focused, hot, and aggressive It is associated w ith masculinity and daytime This refers to the method developed by the mathematician Hua Luogeng Guided by the mathematical principles, it aims to find the optimum solution in manufacturing and scientific ex periments w ith the minimum possible tests From a w ell-know n poem by Du Fu (712–770), a prominent Chinese poet of the Tang Dynasty Li Dazhao (1888–1927) w as a professor of history and librarian at Peking University, one of the founders of the Chinese Communist Party He w as the first important Chinese intellectual to support the Bolshevik Revolution in Russia Poem by X in Qiji (1140–1207), a famous poet of Southern Song Dynasty These w ords are from the book Muo Shu (Touch the book) by Feng Jicai (1942–) and published in 1993 by Shanx i People Press In this w ork, Qu Y uan (340–278BC) criticized the fatuity of the King of Chu How ever, his suggestions w ere not adopted by the King Qu Y uan committed suicide by drow ning himself in the Miluo River 10 Quoted from Benedetto Croce (1866–1952), an Italian critic, idealist philosopher, and occasional politician E1C08 12/03/2009 16:19:54 Page 185 Studying Classics for Enlightenment 185 11 For a full list, see the Appendix 12 In Essentials o f Po litics during Zhen Guan’s Reign—Being Careful with the O utco me (Tang Dynasty) 13 Miller, I 1984, Imagery in Scientific Tho ught: Creating 20th-Century Physics, Birkhauser Boston lnc 14 From a review of Peter F Drucker’s book The Effective Executive by Zhan Wenming, a former student of Drucker’s 15 This relates to a story from around 200BC involving tw o heroes—Liu Bang and X iang Y u Liu Bang’s army w as beaten by X iang Y u’s, but X iang Y u show ed mercy to his former friend Later, how ever, Liu Bang killed X iang Y u Mao Zedong w rote these w ords tow ards the end of the w ar against Chiang Kai-shek to show that he w ould not imitate X iang Y u 16 Han Feizi (281–233 BC), a philosopher, thinker, politician and w riter in the Warring States Period 17 Ma Su, a famous general, once disregarded the orders of his leader, Zhuge Liang, w hich led to the destruction of Zhuge’s army In order to punish him and to emphasize the impartiality of his regulations, Zhuge Liang had Ma Su ex ecuted, though w ith great regret 18 Shuo Wen Jie Zi, literally ‘‘Ex plaining Simple and Analyzing Compound Characters,’’ w as an early second-century dictionary from the Han Dynasty compiled by X u Shen (58–147) 19 From Mo Zi, a compilation of the thoughts of the philosopher Mo Zi (468–376BC) 20 From Zi X ia, a disciple of Confucius 21 This is a Chinese proverb The phoenix is an imaginary bird w hich, according to legend, had once been an ordinary bird It w as very diligent, picking up and saving all the grain that the other birds left One year a massive drought left no food for birds and the phoenix benevolently offered all the grain it had saved to the other birds The birds w ere very grateful; each gave the phoenix one of its most beautiful feathers and respected the phoenix as their king Where there w as a phoenix , many birds w ere attracted 22 From the Bo o k o f Po etry (Western Zhou 1046–771BC) and quoted by Chinese premier Wen Jiabao at a press conference to indicate that China, an old country w ith a long history, has a mission to reform and China w ill continue to reform and bring in new view s to co-ex ist w ith the old E1BAPP 12/03/2009 9:3:10 Page 187 Accounting with Hearth: China’s Role in International Finance and Business By Wang Jun Copyright© 2010 Wang Jun A PPE N D IX Politics and Natural Sciences: Selected Wo rks o f Mao Zedo ng, Selected Wo rks o f Deng Xiao ping, Selected Wo rks o f Jiang Zemin, Reading o f Scientific O utlo o k o n Develo pment, Zhenguan Administratio n (by Wu Jing), Sixteen Po licies (by Zhuge Liang), The Prince (by Machiavelli), Nine-Chapter Arithmetic, A Series o f Bo o ks o n Chinese Mathematics Histo ry (by Wu Wenjun et al.), Mathematical Principles o f Natural Philo so phy (by Isaac New ton), A Brief Histo ry o f Science (by William Cecil Dampier) and A Brief Histo ry o f Time (by Stephen Haw king) Humanities: The History and Philosophy section includes The Bo o k o f Changes, Lao tze, The Analects o f Co nfucius, Mencius, Chuang Tzu, The Bo o k o f Histo ry, Intrigues o f the Warring States, Zi Zhi To ng Jian, A Brief Histo ry o f Chinese Philo so phy (by Fung Y u-lan), Chinese Brief Histo ry (by Bo Y ang), The Bible, Meditatio ns (by Marcus Aurelius), The Theo ry o f Moral Sentiments (by Adam Smith), Dialo gues (by Plato), Les Pensees (by Blaise Pascal), A Histo ry o f Western Philo sophy (by Bertrand Russell), The Spirit o f the Laws (by Charles de Montesquieu), Philoso phy Notes (by Vladimir Lenin), O n Pro tracted War The Literature and Arts section includes The Bo o k o f So ngs, The So ng o f the So uth, Best o f Classical Pro se, The Classic o f Mo untains and Rivers, Three Hundred Po ems o f Tang Dynasty, No te and Co mmentary o n Three Hundred Ci Po etry o f the So ng Dynasty, A Dream o f Red Mansio ns, Co mplete Wo rks o f Lu Xun, Fo rtress Besieged (by Qian Zhongshu), Dialo gue As A Style (by Plato), Co llected Wo rks o f Shakespeare, Ho w the Steel Was Tempered (by Nikolai Ostrovsky), War and Peace (by Leo Tolstoy), The Divine 187 E1BAPP 12/03/2009 188 9:3:10 Page 188 APPENDIX Co medy (by Dante), Jean-Christo phe (by Romain Rolland), The O ld Man and the Sea (by Ernest Hemingw ay), O ne Hundred Years o f So litude (by Gabriel Garcia Marquez), and Rabindranath Tagore’s Gitanjali and Stray Birds Economics: Das Kapital (by Karl Marx ), Theo ry o f Taxatio n (by William Petty), O n the Nature o f Wealth, Mo ney and Tax (by Pierre Le Pesant de Boisguillebert), Principles o f Po litical Eco no my and Taxatio n (by David Ricardo), The Wealth o f Natio ns (Adam Smith), An Essay o n the Principle o f Po pulatio n (by Robert Malthus), New Principles o f Po litical Eco no my (by Simonde de Sismondi), The Natio nal System o f Po litical Eco no my (by Friedrich List), The O rigins o f Family, Private O wnership and Co untry (by Friedrich Engels), Principles o f Eco no mics (by Alfred Marshall), The Distributio n o f Wealth (by John Bates Clark), The Theo ry o f Eco no mic Develo pment (by Joseph Schumpeter), Welfare Eco no mics (by Arthur Cecil Pigou), Eco no mics o f Imperfect Co mpetitio n (by Joan Robinson), The General Theo ry o f Emplo yment, Interest and Mo ney (by John Maynard Keynes), Value and Capital (by John Richard Hicks), Eco no mics (by Paul A Samuelson, et al.), Capitalism and Freedo m (by Milton Friedman), Public Cho ice Theo ry (by James McGill Buchanan), Eco no mics (by Joseph E Stiglitz), The Eco no mics o f Taxatio n (by Bernard Salanie), Principles o f Finance (by Richard Abel Musgrave), Public Finance: A Co ntempo rary Applicatio n o f Theo ry to Po licy (by David N Hyman), Principles o f Eco no mics (by Greg Mankiw ), Selected Wo rks o n Eco no mics o f Ro bert Mundell, Mo rgan Financial Gro up (by Ron Chernow ), Beating the Street (by Peter Lynch), Value at Risk (by Philippe Jorion), Game Theo ry: Analysis o f Co nflict (by Roger B Myerson), The Wo rld Is Flat (by Thomas L Friedman) Management: The Principles o f Scientific Management (by Frederick Winslow Taylor), Theo ries o n So cial and Eco no mic O rganizatio ns (by Max Weber), The Functio ns o f the Executive (by Chester Irving Barnard), The New Science o f Management Decisio n (by Herbert Alex ander Simon), New Patterns o f Management (by Rensis Likert), Marketing Management (by Philip Kotler), Criteria o f O rganizatio nal Effectiveness (by Stanley E Seashore), O rganizatio n and Management: A E1BAPP 12/03/2009 9:3:10 Page 189 APPENDIX 189 System and Co ntingency Appro ach (by Fremont E Kast et al.), Jack: Straight fro m the Gut (by Jack Welch), Co mpetitive Strategy (by Michael Porter), Theo ry Z (by William Ouchi), The General Managers (by John P Kotter), In Search o f Excellence (by Tom Peters), Leaders: The Strategies fo r Taking Charge (by Warren G Bennis), Reengineering (by Michael Hammer), Internal Co ntro l—Integrated Framewo rk and Enterprise Risk Management—Integrated Framewo rk (by Committee of Sponsoring Organizations of the Treadw ay Commission) Accounting and Auditing: Kw o ng Sui Acco unting Statements (by Liu Y ueyun, the chief officia l of feuda l Chinese Ministry of Revenue in Qing Dyna sty), Lixin Acco unting Series (esta blished by Pa n X ulun), Go o d Will and O ther Intang ible Assets (by Y a ng Rumei), Principles o f Acco unting (by Y a ng Jiw a n, Lou Erx ing, Ge Jia shu, Zha o Y umin a nd Wu Cheng), Theo retical Structure o f Acco unting (by A C Littleton), An Intro ductio n to Co rpo rate Acco unting Standards (by Willia m A ndrew Pa ton a nd A C Littleton), Handbo o k o f Mo dern Acco unting (by Sidney Da vidson), Acco unting Theo ry (by Eldon S Hendriksen), Histo ry o f Acco unting (by Guo Daoya ng), A Histo ry o f Acco unting Tho ug ht (by Micha el Cha tfield), Po sitive Acco unting Theo ry (by Ross L Wa tts), Advanced Manag ement Acco unting (by Robert S Ka pla n), Financial Acco unting Co nceptual Framew o rk (by Fina ncia l A ccounting Sta nda rds Boa rd), Mo ntg o mery’s Auditing (by Montgomery) a nd Brink’s Mo dern Internal Acco unting (by Robert R Moeller a nd Herbert N Witt) E1BINDEX 12/04/2009 8:57:28 Page 191 Accounting with Hearth: China’s Role in International Finance and Business By Wang Jun Copyright© 2010 Wang Jun IN D EX 30 Guiding Opinions on Reinforcing Cultivation of Professional Talents, 73 10th Five-Y ear Plan period, The, 31 10-Y ear Plan for the Cultivation of National (Prospective) Leading Accounting Talents, 109 A Academic leaders, 51–55, 60, 63, 64, 66, 67 Accounting ecology, 126 Accounting innovation, 125, 126 Accounting leaders, 36–45, 109, 114, 124, 125, 129, 133 talent pool, 67 Accounting Society, 37, 38, 44 Accounting talent strategy, 28–36 Administrative units, 95 A learning society, 80 Aligning accounting w ith international standards, 115 All-round talent, 55 Analects, 52, 60 APEC, 57 Audit storm, 128 B Balance sheet, 130, 131 Balancing of accounts, 111 Bo o k o f Rites—Reco rd o n the Subject o f Educatio n, 60 C Capabilities framew ork of the CFO in China, 40 Chief accountants, 91, 97 China Accounting Standards Committee, 35 China Aviation Oil, 95 Chinese Accounting Standards on Business Enterprises and Auditing Standards, 53 CICPA, 37, 130 Collapse of a dam in X iangfen county, 170 Committee for the Internal Control Standards of Enterprises, 109 Comprehensive budget management, 95 Co mprehensive Mirro r to Aid in Go vernment, 91 Confucius, 19, 23, 75, 82 Construction of both the system and the culture, 127 Contamination of milk pow der from Sanlu Group, 170 Convergent thinking, 13 Corporate Internal Controls Standards Committee, 95 D Descartes, Rene, 118 Dialectic thinking, 93, 94 Divergent thinking, 90 Double-entry accounting system, 111 ‘‘Dow n to the Countryside’’ movement, The, 2, 23 Drucker, Peter, 41 191 E1BINDEX 12/04/2009 192 8:57:28 Page 192 INDEX E ‘‘Eight Dos and Eight Don’ts,’’ 52 Eight Outstanding Painters in Y angzhou, 167 Einstein, Albert, 56 Enron, 95 F Fannie Mae (Federal National Mortgage Association), 164 Feng Y oulan, 112 Financial directors, 91 Financial netw orks, 95 Financing and acquisition, 94 Freddie Mac (Federal Home Loan Mortgage Corporation), 164 Friedman, Thomas, 89 Frog ex periment, 99 Fu Sinian, Fundamental line, 151 G Gini coefficient, 118 Glorious Revolution, the, 16 Gogol, 59 H Harvard University, 7, 48 Histo ry o f the Three Kingdo ms, 91, 97 Hu Jintao, 29 Huangpu, 38, 39, 48 I I Ching: Bo o k o f Changes, 137, 139, 144, 146, 147, 150, 166, 168 Industry elite, 113, 114 Innovative thinking, 82 Internal control system, 115 International Accounting Standards Board, 35 Invisible hand, 77 J Joint statement on the alignment process, 35 K Kang Da, 38, 39, 48 Kang Y ouw ei, 60 Keynes, John Maynard, 54 L Leninism, 123 Li Ruihuan, 116, 119 Liang Qichao, 60 Lifelong education, 80 Lin Y utang, 44 Lo ng Zho ng Dui (Lo ngzho ng Plan), 176 Lu X un 167–169 M Manhattan Project, 48 Manifesto of the Communist Party, 124 Mao Zedong, 2, 9, 21 Marx , Karl Heinrich, 148, 155, 164, 168 Marx ist philosophy, 93, 123 Matching of cause and effect, 131 Matching of time, 131 Matching principle, 131 Mathematical Fo rmulatio n and Generalizatio n, 149 Mei Y iqi, 44 N Nature of socialism, 151 Nix on, Richard, 91 O October Revolution, 123 O n Learning, 19 P Pan X ulun, 52, 76 Paris Commune, 123 Partnership aw areness, 79 Pioneers in their times, 137 Practicing qualifications, 30 Principle of conservatism, 131 Principle of energy conservation, 111 Principle of fairness, 131, 132 Production chains, 95 E1BINDEX 12/04/2009 8:57:28 Page 193 INDEX Program for Supporting Outstanding Talent of the Century, 109 Project for Students Under the CPA Undergraduate Program, 73 Promoting convergence, 57 Promoting the internationalization of accounting firms, 115 Public Company Accounting Oversight Board, 75 Pythagoras, 110 Q Qi Baishi, 15 Qin dynasty, 28 Qu Y uan, 23 R Radical changes in know ledge, 82 Reco rds o f the Grand Histo rian, 91 Re-formulation of processes, 94 Re-organization, 94 Responsible accounting, 95 Rule of analysis, 121 Rule of consolidation, 121 Rule of enumeration, 121 Rule of self-evidence, 121 S Sarbanes-Ox ley Act, 75 SARS, 16 School of Accounting, 38 Scientific concept of development, Scientific socialism, 123 Securities Regulatory Commission, 95 Sew ard, William, 59 Shakespeare, 137 Smith, Adam, 52, 77 Socrates, 117 So rro w o f Separatio n, 23 Spirit of China’s accounting, 28 State-ow ned Assets Commission, 95 Status of concentrating on one’s academic research and not influenced by the outer society Stratagems o f the Warring States, 91, 97 193 System of elimination, 83 System of ex amination and encouragement, 83 System of measurement in accounting, 130 System of theories on market economy, 140 T Test for professional technical qualifications, 30 Thackeray, 106 The 2008 Beijing Olympic Games, 169, 182 The Art o f War, 97 The Bo o k o f Changes, 110 The Do ctrine o f Mean, 21 The fundamental guideline, 151 The Liberation War, 98 The Selected Wo rks o f Deng Xiao ping, 151 The Theo ry o f Mo ral Sentiments, 52 The Wealth o f Natio ns, 52 The Wo rld is Flat, 89 Third plenary meeting of the 16th Party Congress, the, 21 Three Kingdo ms, Ro mance o f, 106 Three Represents, Three thousand disciples and seventy tw o sages, 60 Training elite accounting talent, 115 Tw eedie, Sir David, 57 U US Financial Accounting Standards Board, 141 Utopian socialism, 123 V Value management models, 95 W Wang Puqu, Ward Graham, 53 Well-off society, 135 E1BINDEX 12/04/2009 194 8:57:28 Page 194 INDEX ‘‘512 Wenchuan Earthquake’’ (May 12 Wenchuan Earthquake), 169 WorldCom, 95 X X iamen National Accounting Institute, 24 X un Zi, 19 Y Yin and yang discourse, 111 Y in Guang X ia, 95 Z Zen, 159, 160 Zhang Zhongx ing, Zhao Pu-chu, 107 Zhuge Liang, 94, 139, 176, 177, 178 ... of sharing a common understanding of accounting language and principles, he has made a profound contribution to China’s international standing and the success and stability of its economy In 2008,... xi E1C01 12/03/2009 15:48:54 Page Accounting with Hearth: China’s Role in International Finance and Business By Wang Jun Copyright© 2010 Wang Jun Chapter Recharging Y ourself to Face the Challenge... of Finance in recent years and as Secretary-General of the China Accounting Standards Committee, has been at the center of his country’s remarkable advances in financial reporting and accounting