Ministry of Finance, Practice of Independent Auditing Announcement No. 7: Auditing of Commercial Bank Accounting Statements

Published: March 29 2001
Effective: July 1 2001
Applicability: For the purposes of the Announcement, a "commercial bank"means an enterprise legal person established in accordance with the PRC, Company Law and PRC, Commercial Banking Law to provide such services to the public as deposit taking, lending and account settlement (Article 2).

Main contents: The Announcement states that due to the nature of the risks surrounding the operation of commercial banks, a registered accountant shall follow prudent professional practice in order to minimize audit risks (Article 5). When accepting an audit appointment, the registered accountant shall reach an agreement with the bank with respect to, among other things, the purpose and scope of the audit, the responsibilities and obligations of each party and the use of the audit report (Article 8). According to the Announcement, the registered accountant usually cannot fully rely on substantive tests but must rely on internal control tests (Article 15). Detailed provisions are set out in the Announcement regarding internal control tests and substantive tests (Parts Four and Five).
Related legislation: Ministry of Finance, Independent Auditing Basic Guidelines; PRC, Company Law (Amended), Oct 27 2005, CLP 2005 No.10 p21 and PRC, Commercial Banking Law, May 10 1995, CLP 1995 No.5 p32