Several Regulations of the Ministry of Finance on Improving and Strengthening the Administration on the Auditing of Annual Accounting Statement of Enterprises
Several Regulations of the Ministry of Finance on Improving and Strengthening the Administration on the Auditing of Annual Accounting Statement of Enterprises
Several Regulations of the Ministry of Finance on Improving and Strengthening the Administration on the Auditing of Annual Accounting Statement of Enterprises
Cai Qi [2004] No. 5
January 17, 2004
For the purposes of further improving the quality of the accounting information of enterprises, giving full play to the social agencies' role in supervising finance and accounting of enterprises and regulating the administration on the auditing of annual accounting statements of enterprises, in accordance with Article 2 of Circular of the State Council on Rectifying Accounting Order and Further Improving Accounting Quality (Guo Fa [1996] No. 16), on the basis of summarizing the operation of the CPA auditing system for the annual accounting statements by enterprises and in combination with the requirements of the situations of China's accession to WTO and of enterprises' further reform and development, Several Regulations on Improving and Strengthening the Administration on the Auditing of Annual Accounting Statement of Enterprises was reenacted We hereby print and distribute the Regulations for implementation.
After the Several Regulations on Improving and Strengthening the Administration on the Auditing of Annual Accounting Statement of Enterprises enters into effect, Circular of the Ministry of Finance on Printing and Distributing the Tentative Measures on the Auditing of Annual Accounting Statement of State-owned enterprises by Certified Public Accountants(Cai Jing Zi [1998] No.114),Circular of the Ministry of Finance on Several Issues Concerning the Auditing of Annual Accounting Statement of State-Owned Enterprises by Certified Public Accountants(Cai Qi [2000] No. 905) and Supplementary Circular of the Ministry of Finance on Several Issues Concerning the Auditing of Annual Accounting Statement of State-Owned Enterprises by Certified Public Accountants(Cai Qi [2001] No. 707)shall be abolished simultaneously.
Appendix: Several Regulations of the Ministry of Finance on Improving and Strengthening the Administration on the Auditing of Annual Accounting Statement of Enterprises
Chapter I General Provisions
Article 1 For the purposes of meeting the need of the development of socialist market economy, improving the quality of the annual accounting statement of the enterprise, and strengthening and improving the auditing of the annual accounting statement of the enterprise, these Regulations are formulated in accordance with the requirements on legally implementing the auditing system for annual accounting statement of the enterprise stipulated in Circular of the State Council on Rectifying Accounting Order and Further Improving Accounting Quality.
Article 2 These Regulations shall be applied to all the state-owned and the state-controlled non- financial enterprises (hereinafter referred to as the enterprises) within the territory of the People's Republic of China except for the special industry enterprises listed in Article 3.
In case of any different provisions of the state on the auditing of the annual accounting statement of foreign-invested enterprises and listed companies, such provisions shall prevail.
For enterprises invested and established enterprises overseas by the enterprises, the auditing of their annual accounting statements shall be governed by pertinent laws and regulations of the residence.
Article 3 State-owned enterprises in the following special industries do not adopt the CPA auditing system for annual accounting statements for the present:
1. military enterprises that continue to retain or seal up military research and production capability (excluding civil product companies with the qualification of independent legal entity invested by these military enterprises)
2. prison and reeducation enterprises through labor, frontier farms, agricultural enterprises of the Xinjiang Production and Construction Corps and the reclamation area in Heilongjiang province.
Article 4 For enterprises undertaking the reserve business in state goods and materials, grains, cotton, non-staple foodstuffs, etc., the authorized stockpiles, the authorized stock capital and the operation of relevant business enjoying special policies shall be subject to the results examined and approved by competent authorities in charge of financial affairs.
Article 5 The enterprises shall initiatively cooperate with CPA in auditing the annual accounting statement, provide materials related to the audit in accordance with the engagement letter and acknowledge the truth of the materials provided by them, and shall take the corresponding accountability.
Article 6 CPA and accounting firms shall, in accordance with Independent Auditing Rules and other operation criteria, conduct the audit business under the principle of independence, objectivity and impartiality, issue audit reports pursuant to the requirements of engagement letter and take corresponding responsibility for the audit report issued by them.
Chapter II General Requirements on the Administration of the Auditing of Annual Accounting Statement of the Enterprise
Article 7 The enterprises shall entrust auditing pursuant to the decision of the board of directors or the working conference of managers (factory director).
The auditing of the annual accounting statements of enterprises wholly invested by the enterprise group shall be entrusted unifiedly by the group company.
The enterprises having not broken off with the competent departments of government shall, on a basis of enterprises that shall submit the annual accounting statements directly to the government departments in charge, unifiedly entrust the accounting firms to audit the annual accounting statements of the enterprises.
Article 8 The enterprises shall entrust or change an accounting firm before the end of September, and shall sign an engagement letter with the entrusted accounting firm, specifying the scope of audit, the contents of audit, the rights and obligations of both parties, amount of charges and way of payment, and liabilities for breach of the engagement letter, and shall provide necessary conditions for the accounting firm to conduct the audit.
Article 9 The audit of the annual accounting statement of the enterprises shall be legally conducted by CPA of China and accounting firms legally established within the territory of China in accordance with law.
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