BEIJING, Feb. 17 -- With the adoption of new accounting rules, domestic-listed companies are expected to disclose a 20 billion yuan (US$2.5 billion) profit surplus in their 2006 results.

China Securities News reported yesterday that listed companies' 2006 annual financial performance s would probably result in a combined US$2.5 billion profit increase due to the new accounting rules that focus more on a firm's current operating business rather than unusual gain and loss.

The rules, released by the Ministry of Finance (MOF) on Tuesday and formally effective in January 2007, have been revised to reflect international standards of companys' accounting and auditing practices.

The new standards, which ask firms to record gains from non-cash equity trade into annual profit account, will probably garner a combined 7.5 billion yuan (US$926 million)'s profit surplus to domestic-listed firms, the newspaper said.

A company can also record its gains from exempted debt into current profit, a move that will probably earn domestic-listed firms a combined 6.3 billion yuan (US$777 million) in profit.

Other regulations on asset provisions and expenses will also likely have a large effect on the firm's profit result, bringing an estimated 6.2 billion yuan (US$765 million) profit surplus.

"Investors should pay careful attention to a firm's profit changes at the turning point. Some listed firms used to manipulate profit with the existing rules," Shen Guoquan, member of Public Offering Review Committee with China Securities Regulatory Commission, told China News Securities.

"The new accounting rules will make listed companies' financial report more real and objective. Space to manipulate financial reports will surely shrink," Shen said.

The Shanghai-based newspaper also reported that foreign investors' confidence in the A shares will increase with the issue of the new accounting and auditing rules, quoting Cai Hongping, head of the investment bank, BNP Paribas Peregrine's Asia department's comments.