Ministry of Finance Internal Accounting Control Standards - Basic Standards (Trial Implementation)

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Main contents: In Part Two, the Standards stipulate that all persons performing accounting duties shall be bound by accounting control measures (Article 7, Item Two) and that control measures should ensure that accounting departments and positions are rationally structured and that the authority and responsibilities of such accounting departments and positions are clearly differentiated (Item Four). Part Three requires that the enterprise maintains standard policies and processes for investing (Article 11), making purchases and payments (Article 13), and financing (Article 14). Accounting departments and accounting personnel should be involved in product pricing and establishing credit policies (Article 15). In order to reduce risk, enterprises should also strengthen accounting control over security-related functions (Article 17). The mechanisms for internal accounting control stipulated in Part Four include: clear differentiation of responsibilities, control over delegation of authority, control over the accounting system, budgetary control, control over property safeguards, risk control, internal reporting control, and electronic information technology control (Article 18). A work unit should establish an effective risk-management system (Article 24). It should also maintain an internal reporting system that accurately reflects the work
unit's economic situation and efficiently provides business-related information (Article 25). Part Five stipulates that the work unit should emphasize the monitoring and inspection of the internal accounting control system (Article 27).
Related legislation: PRC, Accounting Law (Revised), 31 Oct 1999, CLP 2000 No.1 p4