Ministry of Finance, Practice of Independent Auditing Announcement No. 1: Verification of Capital Contributions (Revised)

Issued: January 21 2001
Effective: July 1 2001
Applicability: For the purposes of the Announcement, "verification of capital contributions" means verification by a registered accountant of the receipt or change of the registered capital of the audited entity established or to be established in the PRC (Articles 2 and 3).

Main contents: The Announcement prescribes the scope and procedures of verification of capital contributions and the main contents of a capital contribution verification report (Parts Two and Three). Verification of capital contributions for the establishment of an entity shall generally be confined to the verification of the matters relating to the actual capital contributions, and verification of capital contributions for a change in registered capital shall generally be confined to verification of the matters relating to the change (Articles 10 and 11). Procedures for verification vary depending on the nature of the capital (Articles 12 and 13). The capital contribution verification report issued in connection with the verification exercise shall contain the elements specified in the Announcement (Article 19). A capital contribution verification report is not subject to review by any other entities and has a legal certification effect (Articles 23 and 24). The Announcement also provides that the responsibility of the registered accountant conducting a capital contribution verification does not replace or reduce the responsibility of the capital contributor and the audited entity to provide true, legal and complete information for the capital contribution verification exercise or release them from such responsibility (Articles 4 and 5).
Related legislation: Ministry of Finance, Independent Auditing Basic Guidelines