Administrative Measures for the Practice Licensing and the Supervision of Accounting Firms (Revised in 2019)
Administrative Measures for the Practice Licensing and the Supervision of Accounting Firms (Revised in 2019)
Administrative Measures for the Practice Licensing and the Supervision of Accounting Firms (Revised in 2019)
Order of the Ministry of Finance of the People's Republic of China No.97
January 2, 2019
(Promulgated by the Order of the Ministry of Finance of the People's Republic of China No.89 on August 20, 2017 and revised in accordance with the Decision of the Ministry of Finance on Amending Two Departmental Rules Including the Measures for the Licensing, Supervision and Administration of the Practices of Accounting Firms on January 2, 2019)
Chapter I General Provisions
Article 1 These Measures have been formulated in order to standardize the practice licensing of accounting firms and their branches, to strengthen the supervision and management of accounting firms and to promote the healthy development of the certified public accountants industry, in accordance with the Law of the People's Republic of China on Certified Public Accountants (hereinafter referred to as the "CPA Law"), the Partnership Enterprise Law of the People's Republic of China, the Company Law of the People's Republic of China and other laws and administrative regulations.
Article 2 These Measures are applicable to the administration, supervision and guidance over accounting firms and CPAs by the Ministry of Finance as well as the financial departments of all provinces, autonomous regions and municipalities directly under the central government (hereinafter referred to as the "provincial financial departments").
Article 3 The provincial financial departments shall, in accordance with the principles of openness, fairness, impartiality, convenience and efficiency, handle the affairs of practice licensing of the accounting firms in their jurisdiction according to the law, and supervise and manage the accounting firms in their jurisdiction.
The Ministry of Finance and the provincial financial departments shall strengthen the policy guidance on the accounting firms and CPAs, create a fair accounting market environment, guide and encourage the accounting firms to constantly improve their internal governance and achieve orderly development.
The provincial financial departments shall promote online government administration and facilitate the practice licensing application and alteration filing of accounting firms.
Article 4 The accounting firms and CPAs shall abide by the laws and administrative regulations, follow the professional ethics and observe the practice standards and rules.
Article 5 The accounting firms and CPAs shall be independent, objective and impartial during practice, which shall be protected by law with no unlawful interference from any entity or individual allowed.
Article 6 The accounting firms may adopt the form of general partnership, special general partnership or limited liability company.
The accounting firms engaging in the securities service business or other specific businesses related to public interests as stipulated by laws and administrative regulations shall adopt the general partnership or special general partnership form, and accept the supervision from the Ministry of Finance.
Chapter II Acquisition of Practice Licenses of Accounting Firms
Article 7 Accounting firms shall apply for a practice license from the provincial financial departments where they are located within 60 days upon receiving the business licenses.
The accounting firms that have not obtained a practicing license shall not carry out business activities in the name of accounting firm, and shall not engage in the business stipulated in Article 14 of the CPA Law (hereinafter referred to as "the CPA's statutory business").
Article 8 For application of a practice license, a general partnership accounting firm shall possess the following conditions:
1. Having more than two partners, who meet the conditions stipulated in Article 11 of these Measures;
2. Having a written partnership agreement;
3. Having a place of business.
Article 9 For application of a practice license, a special general partnership accounting firm shall possess the following conditions:
1. Having more than 15 partners of CPAs, who meet the conditions stipulated in Article 11 and Article 12 of these Measures;
2. Having more than 60 CPAs;
3. Having a written partnership agreement;
4. Having a place of business;
5. Other conditions prescribed by laws, administrative regulations or the Ministry of Finance under their authorization.
Article 10 For application of a practice license, a limited liability accounting firm shall possess the following conditions:
1. Having more than five shareholders, who meet the conditions stipulated in Article 11 of these Measures;
2. Having registered capital of no less than CNY300, 000;
3. Having articles of association jointly formulated by the shareholders;
4. Having a place of business.
Article 11 Except for the provisions of Article 12 of these Measures, the partners (shareholders) of an accounting firm shall meet the following conditions:
1. Having CPA qualification;
2. Not having been subject to administrative penalty for practice within three years before becoming a partner (shareholder);
3. Having engaged in auditing business in accounting firms for the past three consecutive years with no less than ten years of total business hours in auditing, or having engaged in auditing business for the past five consecutive years in accounting firms after obtaining a CPA qualification;
4. Having not been given to decisions of not accepting, not approving the application of practicing licenses or revoking the practicing license by the provincial financial departments due to fraud, bribery or other improper means within three years before becoming a partner (shareholder);
5. Having a stable domicile in the territory with a living term of no less than six months per year, and having a recent continuous residence record for at least five years.
In the case of CPA qualification revocation or cancellation due to administrative penalties or criminal penalties, the period of engagement in auditing business before the revocation or cancellation of practicing qualification shall not be included in the accumulated years stipulated in Item 3, Paragraph 1 of this Article.
Article 12 A person who does not meet the conditions prescribed in Item 1 and Item 3, Paragraph 1 of Article 11 of these Measures, but has the relevant professional qualifications, may take specified internal management responsibilities or act as a partner in the range of consulting business in a special general partnership accounting firm as agreed in the partnership agreement, but shall not act as a chief partner or an executive partner, or in any way have control over the accounting firm. Specific measures shall be separately formulated.
Article 13 A general partnership accounting firm or a special general partnership accounting firm shall set up a chief partner, and the position shall be held by an executive partner.
A limited liability accounting firm shall set up a chief accountant, and the position shall be held by the legal representative who shall be a shareholder of the limited liability accounting firm.
The chief partner (chief accountant) shall meet the following conditions:
1. Having a stable domicile in the territory with a living term of no less than six months per year, and having a recent continuous residence record of at least ten years;
2 Having the ability and experience of performing the partnership agreement or the administrative authority granted by the articles of association of the company on behalf of the accounting firm.
Article 14 Accounting firms shall strengthen the practice quality control, establish and improve the system for the rights and responsibilities of partners (shareholders), signing CPAs and other employees in the practice quality control.
The chief partner (chief accountant) takes the major responsibility for the quality of the practice of an accounting firm. The managing partner (shareholder) in charge of the auditing business and the managing partner (shareholder) in charge of quality control take the direct management responsibilities for the quality of auditing business of the accounting firm. And the auditing project partner (shareholder) is directly responsible for the auditing quality of the specific business project undertaken by him or her.
Article 15 Where a CPA acts as a partner (shareholder) of an accounting firm and involves the transfer of a practicing relationship, he/she shall first complete the move-out procedure from the original accounting firm with the CPA Association of the provinces, autonomous regions and municipalities directly under the central government (hereinafter referred to as "the provincial CPA association"). If he/she is also a partner (shareholder) of the original accounting firm, withdrawal or equity transfer procedures shall be completed first in accordance with the relevant laws, administrative regulations as well as the partnership agreement or the articles of association of the company.
Article 16 The name of an accounting firm shall conform to the relevant provisions of the State. Accounting firms shall not use names including the trade names of other accounting firms that have obtained a practice license without consent.
Article 17 An accounting firm shall submit the following materials to the provincial financial department at the place where the firm is located for applying for a practice license:
1. The application form for a practice license of an accounting firm;
2. Materials of practice experience of the accounting firm's partners (shareholders) that meet the relevant requirements;
3.
......
Order of the Ministry of Finance of the People's Republic of China No.97
January 2, 2019
(Promulgated by the Order of the Ministry of Finance of the People's Republic of China No.89 on August 20, 2017 and revised in accordance with the Decision of the Ministry of Finance on Amending Two Departmental Rules Including the Measures for the Licensing, Supervision and Administration of the Practices of Accounting Firms on January 2, 2019)
Chapter I General Provisions
Article 1 These Measures have been formulated in order to standardize the practice licensing of accounting firms and their branches, to strengthen the supervision and management of accounting firms and to promote the healthy development of the certified public accountants industry, in accordance with the Law of the People's Republic of China on Certified Public Accountants (hereinafter referred to as the "CPA Law"), the Partnership Enterprise Law of the People's Republic of China, the Company Law of the People's Republic of China and other laws and administrative regulations.
Article 2 These Measures are applicable to the administration, supervision and guidance over accounting firms and CPAs by the Ministry of Finance as well as the financial departments of all provinces, autonomous regions and municipalities directly under the central government (hereinafter referred to as the "provincial financial departments").
Article 3 The provincial financial departments shall, in accordance with the principles of openness, fairness, impartiality, convenience and efficiency, handle the affairs of practice licensing of the accounting firms in their jurisdiction according to the law, and supervise and manage the accounting firms in their jurisdiction.
The Ministry of Finance and the provincial financial departments shall strengthen the policy guidance on the accounting firms and CPAs, create a fair accounting market environment, guide and encourage the accounting firms to constantly improve their internal governance and achieve orderly development.
The provincial financial departments shall promote online government administration and facilitate the practice licensing application and alteration filing of accounting firms.
Article 4 The accounting firms and CPAs shall abide by the laws and administrative regulations, follow the professional ethics and observe the practice standards and rules.
Article 5 The accounting firms and CPAs shall be independent, objective and impartial during practice, which shall be protected by law with no unlawful interference from any entity or individual allowed.
Article 6 The accounting firms may adopt the form of general partnership, special general partnership or limited liability company.
The accounting firms engaging in the securities service business or other specific businesses related to public interests as stipulated by laws and administrative regulations shall adopt the general partnership or special general partnership form, and accept the supervision from the Ministry of Finance.
Chapter II Acquisition of Practice Licenses of Accounting Firms
Article 7 Accounting firms shall apply for a practice license from the provincial financial departments where they are located within 60 days upon receiving the business licenses.
The accounting firms that have not obtained a practicing license shall not carry out business activities in the name of accounting firm, and shall not engage in the business stipulated in Article 14 of the CPA Law (hereinafter referred to as "the CPA's statutory business").
Article 8 For application of a practice license, a general partnership accounting firm shall possess the following conditions:
1. Having more than two partners, who meet the conditions stipulated in Article 11 of these Measures;
2. Having a written partnership agreement;
3. Having a place of business.
Article 9 For application of a practice license, a special general partnership accounting firm shall possess the following conditions:
1. Having more than 15 partners of CPAs, who meet the conditions stipulated in Article 11 and Article 12 of these Measures;
2. Having more than 60 CPAs;
3. Having a written partnership agreement;
4. Having a place of business;
5. Other conditions prescribed by laws, administrative regulations or the Ministry of Finance under their authorization.
Article 10 For application of a practice license, a limited liability accounting firm shall possess the following conditions:
1. Having more than five shareholders, who meet the conditions stipulated in Article 11 of these Measures;
2. Having registered capital of no less than CNY300, 000;
3. Having articles of association jointly formulated by the shareholders;
4. Having a place of business.
Article 11 Except for the provisions of Article 12 of these Measures, the partners (shareholders) of an accounting firm shall meet the following conditions:
1. Having CPA qualification;
2. Not having been subject to administrative penalty for practice within three years before becoming a partner (shareholder);
3. Having engaged in auditing business in accounting firms for the past three consecutive years with no less than ten years of total business hours in auditing, or having engaged in auditing business for the past five consecutive years in accounting firms after obtaining a CPA qualification;
4. Having not been given to decisions of not accepting, not approving the application of practicing licenses or revoking the practicing license by the provincial financial departments due to fraud, bribery or other improper means within three years before becoming a partner (shareholder);
5. Having a stable domicile in the territory with a living term of no less than six months per year, and having a recent continuous residence record for at least five years.
In the case of CPA qualification revocation or cancellation due to administrative penalties or criminal penalties, the period of engagement in auditing business before the revocation or cancellation of practicing qualification shall not be included in the accumulated years stipulated in Item 3, Paragraph 1 of this Article.
Article 12 A person who does not meet the conditions prescribed in Item 1 and Item 3, Paragraph 1 of Article 11 of these Measures, but has the relevant professional qualifications, may take specified internal management responsibilities or act as a partner in the range of consulting business in a special general partnership accounting firm as agreed in the partnership agreement, but shall not act as a chief partner or an executive partner, or in any way have control over the accounting firm. Specific measures shall be separately formulated.
Article 13 A general partnership accounting firm or a special general partnership accounting firm shall set up a chief partner, and the position shall be held by an executive partner.
A limited liability accounting firm shall set up a chief accountant, and the position shall be held by the legal representative who shall be a shareholder of the limited liability accounting firm.
The chief partner (chief accountant) shall meet the following conditions:
1. Having a stable domicile in the territory with a living term of no less than six months per year, and having a recent continuous residence record of at least ten years;
2 Having the ability and experience of performing the partnership agreement or the administrative authority granted by the articles of association of the company on behalf of the accounting firm.
Article 14 Accounting firms shall strengthen the practice quality control, establish and improve the system for the rights and responsibilities of partners (shareholders), signing CPAs and other employees in the practice quality control.
The chief partner (chief accountant) takes the major responsibility for the quality of the practice of an accounting firm. The managing partner (shareholder) in charge of the auditing business and the managing partner (shareholder) in charge of quality control take the direct management responsibilities for the quality of auditing business of the accounting firm. And the auditing project partner (shareholder) is directly responsible for the auditing quality of the specific business project undertaken by him or her.
Article 15 Where a CPA acts as a partner (shareholder) of an accounting firm and involves the transfer of a practicing relationship, he/she shall first complete the move-out procedure from the original accounting firm with the CPA Association of the provinces, autonomous regions and municipalities directly under the central government (hereinafter referred to as "the provincial CPA association"). If he/she is also a partner (shareholder) of the original accounting firm, withdrawal or equity transfer procedures shall be completed first in accordance with the relevant laws, administrative regulations as well as the partnership agreement or the articles of association of the company.
Article 16 The name of an accounting firm shall conform to the relevant provisions of the State. Accounting firms shall not use names including the trade names of other accounting firms that have obtained a practice license without consent.
Article 17 An accounting firm shall submit the following materials to the provincial financial department at the place where the firm is located for applying for a practice license:
1. The application form for a practice license of an accounting firm;
2. Materials of practice experience of the accounting firm's partners (shareholders) that meet the relevant requirements;
3.
......