I am currently working on a paper on financial frauds in China-

PRC GAPP basically is China Accounting Standards which are revised /amended from time to time. However there are still significant reporting differences existing for example for certain items of capitalization, reversal of inventory provisions or fixed assets received as a capital contribution from owners. With the number of cases in accounting frauds rising in PRC, and the shocking news of last year when Ruihua Certified Public Accountants, one of China’s largest accounting firms, was investigated by the country’s securities regulator (suspected to be a fraud the size of Arthur- Andersen). So do these gaps in standards increase the risk for lenders and regulators?