Regulations on Business Enterprise Financial Reporting
Regulations on Business Enterprise Financial Reporting
Regulations on Business Enterprise Financial Reporting
Order of the State Council [2000] No.287
June 21,2000
The Regulations on Business Enterprise Financial Reporting is hereby promulgated with effect as from January 1,2001.
Premier: Zhu Rongji
Chapter I General Provisions
Article 1 The Regulations on Business Enterprise Financial Reporting (hereinafter referred to as "the Regulations"),subject to the Company Law of the People's Republic of China (1999 Revision),are formulated to normalize enterprise financial accounting and reporting,and ensure the truthfulness and integrity of business enterprise financial reporting.
Article 2 Enterprises (including companies,which applies throughout hereof) shall adhere to the Regulations in preparing and providing financial reports.
Financial reports herein refer to the documents as provided by an enterprise reflecting its financial conditions as of a specific date,and the operating performance and cash flows for a certain period.
Article 3 Enterprises shall not prepare and provide financial reports which are false or conceal material facts.
People in charge of an enterprise shall be responsible for the truthfulness and integrity of its financial reports.
Article 4 No organizations or individuals shall by instigation,direction,or coercion cause any enterprises to prepare and provide financial reports which are false or conceal material facts.
Article 5 CPAs and/or accounting firms shall comply with relevant laws,administrative regulations and codes of professional conduct for CPAs in auditing enterprise financial reports,and shall be accountable for the auditing reports thereof.
Chapter II Structure of Financial Reports
Article 6 Financial reports may be annual,half-yearly,quarterly or monthly.
Article 7 Annual and half-year financial reports shall comprise of:
1. Financial statements;
2. Notes to the financial statements;
3. Explanations to the financial conditions.
Financial statements shall include balance sheets,income statements,cash flow statements and other related attachments.
Article 8 Quarterly or monthly financial reports normally only refers to financial statements,which at least shall comprise of balance sheets and income statements. National GAAP or other national policies shall be complied with where notes to financial statements are required for balance sheets and income statements.
Article 9 A balance sheet is a report which reflects the financial condition of an enterprise as of a specific date. A balance sheet shall be itemized by the headings of assets,liabilities and owners' equity (or shareholders' equity,the same for the following hereof),the definitions and sub-itemizations of which shall comply with the following rules:
1. Assets refer to resources owned or controlled by an enterprise,as a result of past transactions or events and from which future economic benefits are expected to flow to the enterprise. On the balance sheet,assets shall be itemized by liquidity,including current assets,long-term investments,fixed assets,intangibles and others. For banks,insurance companies and non-bank financial institutions,assets of special characteristics shall be itemized by the characteristics accordingly.
2. Liabilities refer to present obligations from past transactions or events,the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. On the balance sheet,liabilities shall be itemized by liquidity,including current liabilities,long-term liabilities etc. For banks,insurance companies and non-bank financial institutions,liabilities of special characteristics shall be itemized by the characteristics accordingly.
3. Owners' equity refers to the residual interest in the assets of the enterprise after deducting all liabilities. On balance sheet,owners' equity shall be itemized by the headings of paid-up capital,capital reserve,surplus capital reserve and retained earnings.
Article 10 An income statement refers to a report which reflects the operating performance of an enterprise for a certain accounting period. An income statement shall be itemized by various revenues,expenses and sub-classifications of earnings,the definitions and itemizations of which shall comply with the following rules:
1. Revenues,referring to the total inflow of any economic interests into an
enterprise arising from daily operating activities such as commodities sales,provision of services and transfer of rights to use of the assets.
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