Consider two organizations that require annual independent audits. Organization A is a Chinese SOE with a minority ownership interest of 20 percent, while Organization B is a U.S. company of similar size operating in the same industry. The common stock of both entities is traded on a domestic stock exchange, and each is audited by a Big Four firm. List specific differences that you might expect in the independent audits of these two organizations. Ceteris paribus, would you expect more "audit failures" for SOE audit clients than for similar U.S. audit clients? Defend your answer.

In 2005, the MOF announced that it was working with the International Accounting Standards Board (IASB) to converge CAS with International Financial Reporting Standards (IFRS). The deadline for completing this convergence process was extended on multiple occasions, but the process was ultimately expected to be completed no later than 2012.

Most Chinese business organizations were required to adopt the revised CAS. The IASB reported that it would help Chinese officials develop IFRS-consistent CAS to meet the special needs of China's economic system, including an accounting standard addressing the controversial issue of disclosing material related-party transactions.