Ministry of Finance, Examination, Approval and Supervision of Accounting Firms Tentative Procedures

Promulgated: January 18 2005
Effective: March 1 2005
Applicability: The Procedures apply to the examination, approval and supervision of accounting firms by the Ministry of Finance, and the finance departments of the people's governments of provinces, autonomous regions, municipalities directly under the central government (Article 2), as well as applications for the establishment of accounting firms by persons from outside China (Article 73).

Main contents: Part Two concerns the establishment of accounting firms. Certified public accountants may apply to establish partnership accounting firms or accounting firms with limited liability (Article 6). Article 7 states the conditions for establishing a partnership accounting firm. Article 8 states the conditions for establishing an accounting firm with limited liability. For example, it shall have five or more shareholders, and registered capital of not less than Rmb300,000. Article 9 specifies the qualifications for a partner or a shareholder of an accounting firm. For example, one shall be a holder of a PRC certified public accountant's certificate, and shall practise full time in an accounting firm. Article 23 states the conditions for establishing a branch office of an accounting firm. For example, the firm shall: (1) be established in accordance with the law for three years or more, and have a sound internal management system; (2) have not less than 50 certified public accountants (not including those proposed to be practising in the branch office); and (3) have total net assets and occupational risk funds at the year end of the preceding year of not less than Rmb3 million for an accounting firm with limited liability and not less than Rmb1.5 million for a partnership accounting firm. Article 24 specifies the qualifications a branch office should possess. For example, the person in charge of the branch shall be a partner or a shareholder of the accounting firm, and the branch office shall have at least five certified public accountants (including the person in charge). Part Four of the Procedures concerns changes to and termination of accounting firms and Part Five supervision and inspection.
Related legislation: PRC Certified Public Accountants Law, Oct 31 1993
Repealed legislation: Establishment, Examination and Approval of Partnership Accounting Firms Tentative Procedures, 1993; Ministry of Finance, Clarification on the Limits of Authority to Examine and Approve Partnership Accounting Firms Circular, 1997; Penalties for Violations of the Chartered Accountants Laws Tentative Procedures, Jan 14 1998, CLP 1998 No.6 p4; Ministry of Finance, Several Matters Relevant to Termination of Accounting (Audit) Firms Circular, 1998; Examination and Approval of Accounting Firms with Limited Liability Procedures, Aug 6 1998, CLP 1998 No.8 p4; Administration of Certified Public Accountant's Certificates and Practising Certificates of Accounting Firms Tentative Procedures, 1998; Ministry of Finance, Questions Relevant to Qualifications of the Capital Contributor of Accounting Firms with Limited Liability Reply, 1999; Administration of the Examination and Approval of Mergers of Accounting Firms Tentative Procedures, 2000; Administration of the Examination and Approval of Branch Offices of Accounting Firms Tentative Procedures, 2000; Ministry of Finance, Issues Relevant to the Establishment of Branch Offices by Accounting Firms Circular, 2000; Ministry of Finance, Whether Shareholders of Accounting Firms Continue to Enjoy Shareholder Status after Leaving the Firms Reply, 2001 and Ministry of Finance, Matters Relevant to the Administration of Registration for Cross-province Established Branches of Accounting Firms Circular, May 24 2001, CLP 2001 No.8 p4