Ministry of Finance, Internal Accounting Control Basic Standards

Issued: March 2001
Interpreting authority: Ministry of Finance
Applicability: The Standards are applicable to State organs, social organizations, companies, enterprises, institutions and other economic organizations (work units) (Article 3). For the purposes of the Standards, "internal controls" means the methods, measures and procedures formulated and implemented by a work unit in order to ensure the effective operation of its business and the security and integrity of its assets, prevent fraud and malpractice, and achieve its operational objectives (Article 2).

Main contents: The Standards set out the objectives of and principles guiding internal controls, the substance of internal controls, and the methods of internal controls (Part Two, Part Three and Part Four). As a basic principle, internal controls shall cover all economic activities and all departments of a work unit (Article 7). In terms of content, internal controls shall be reflected in the control of receipts and payments, in-kind assets and assumption of liabilities (Article 8). In respect of methods, internal controls shall take effect in organizational structure, approval procedures, accounting systems, staff quality control, risk control, internal reporting system and electronic information system (Article 18). The Standards further provide that the internal controls of a work unit shall be audited by a specialized institution (Article 28).
Related legislation: PRC, Accounting Law (Revised), Oct 31 1999, CLP 2000 No.1 p4