Tentative Provisions for the Temporary Conduct of Auditing in Mainland China by Overseas Accounting Firms
境外会计师事务所在中国内地临时执行审计业务暂行规定
The Provisions further regulate the temporary conduct of auditing in mainland China by overseas accounting firms.
(Issued by the Ministry of Finance on, and effective as of, March 21 2011.)
(财政部于二零一一年三月二十一日发布施行。)
Cai Kuai [2011] No.4
Article 1: These Provisions have been formulated pursuant to the PRC Law on Certified Public Accountants and other relevant laws and regulations in order to further regulate the temporary conduct of auditing in mainland China by overseas accounting firms.
Article 2: For the purposes of these Provisions, the term “overseas accounting firm” means an accounting firm registered and established in the Hong Kong Special Administrative Region, the Macao Special Administrative Region, Taiwan or a foreign country.
For the purposes of these Provisions, the term “temporary conduct of auditing” (Auditing) means the auditing of a company or another relevant organisation (Domestic Organisation) established in mainland China conducted by an overseas accounting firm on a temporary basis upon appointment by an overseas client.
The scope of such Auditing shall be limited to the audit as directed by the overseas client, and the Auditing report shall have no legal validity in mainland China.
Where laws or regulations of China provide that a service is to be performed by a mainland Chinese accounting firm and its certified public accountants, an overseas accounting firm and its certified public accountants may not perform such service.
Article 3: When an overseas accounting firm is to conduct Auditing in mainland China, it shall submit a written application to the provincial-level finance department of the place where the Auditing is to be conducted. If an overseas accounting firm is to conduct Auditing in two or more provinces, autonomous regions and/or municipalities directly under the central government in mainland China, it shall submit its application to the Ministry of Finance. The overseas accounting firm may conduct the Auditing in mainland China only following approval and issuance of an Auditing permit by the finance department.
Article 4: Overseas accounting firms are encouraged to strengthen cooperation with mainland Chinese accounting firms in the course of Auditing, and to clarify their respective rights and obligations through the execution of cooperation agreements or otherwise.
A mainland Chinese accounting firm and relevant entities and individuals may not cooperate in the conduct of Auditing with an overseas accounting firm that has not secured an Auditing permit or whose Auditing permit is void, or provide it relevant business information such as audit working drafts.
Article 5: When applying for an Auditing permit, an overseas accounting firm shall submit the following written materials to the finance department:
(1) an Application by an overseas accounting firm to Temporarily Conduct Auditing in Mainland China (Schedule 1);
(2) a photocopy of the certificate for commencement of business and a photocopy of the business licence of the overseas accounting firm from the country or region where it is located;
(3) a Form for Information on the Overseas Client and the Domestic Organisation (Schedule 2);
(4) a Form for Information on the Certified Public Accountants and Other Relevant Overseas Working Personnel Who Are to Be Assigned (Schedule 3);
(5) photocopies of the practice certificates of the certified public accountants who are to be assigned and photocopies of the valid and lawful proofs of identity of the other relevant overseas working personnel;
(6) a photocopy of the instrument of appointment from the overseas client; and
(7) a photocopy of the written confirmation indicating acceptance by the Domestic Organisation of the Auditing to be conducted by the overseas accounting firm.
The overseas accounting firm, overseas client and Domestic Organisation shall be liable for the truthfulness and completeness of the foregoing application materials.
Article 6: When a finance department is called upon to grant approval to an overseas accounting firm to conduct Auditing in mainland China, it shall handle matters in accordance with the following requirements:
(1) render its decision on whether or not to grant approval within 20 working days from the date of acceptance of the application; if the circumstances are complex, making it impossible to render a decision by the specified deadline, subject to the approval of the official in charge of the finance department, the period may be extended appropriately, but for no more than 10 working days, and the applicant shall be informed thereof; if it renders a decision granting approval, it shall additionally issue a Permit for an Overseas Accounting Firm to Temporarily Conduct Auditing;
(2) the decision by the finance department to grant approval shall be announced;
(3) within 15 working days from the date of rendering the approval decision, the finance department shall input the examination and approval information into the information system for administration of the certified public accountant industry; and
(4) within 15 working days from the date of the approval decision being rendered, the provincial-level finance department shall forward the approval document to the Ministry of Finance.
Article 7: The Auditing permit of an accounting firm from the Hong Kong or Macao Special Administrative Region shall be valid for five years.
The Auditing permit of an accounting firm from Taiwan shall be valid for one year.
The Auditing permit of an accounting firm from a foreign country shall be valid for half a year.
When an Auditing permit has expired, a new application shall be made.
Article 8: If, during the term of its Auditing permit, an overseas accounting firm adds a new Auditing assignment or its Auditing assignment is modified or a change in the information recorded on its Permit for an Overseas Accounting Firm to Temporarily Conduct Auditing occurs, it shall report the same to the examination and approval authority in a timely manner. If a new Auditing permit needs to be issued due to any of the aforementioned matters, the relevant supporting documentation shall be submitted.
Article 9: If, during the term of its Auditing permit, an overseas accounting firm terminates its operations or has its practice qualifications revoked by the relevant overseas authority, its Auditing permit secured in mainland China shall become null and void accordingly.
Article 10: An overseas accounting firm that is conducting Auditing in mainland China shall submit by May 31 of each year an Auditing report (Schedule 4) for the previous year to the Auditing permit-issuing authority for the record. If the report is submitted to the provincial-level finance department for the record, a copy shall additionally be forwarded to the Ministry of Finance.
Article 11: If the Auditing service is completed before the expiration of the Auditing permit and no further Auditing will be conducted during the term of the Auditing permit, an Auditing report shall be submitted for the record and the Auditing permit shall be returned within three months after completion of the Auditing and the finance department shall make an announcement.
Article 12: Finance departments shall strengthen their monitoring and administration of Auditing by overseas accounting firms in mainland China and conduct monitoring inspections of Auditing by various means such as calling in the overseas accounting firm and the Domestic Organisation for a talk, onsite visits and regular checks.
Misconduct discovered in the course of the examination and approval or administration of Auditing shall be dealt with in accordance with the following provisions:
(1) if the application procedures for an Auditing permit have not been carried out in accordance with provisions or if the Auditing permit has expired but Auditing is nonetheless being conducted in mainland China, the finance department shall order the perpetrator to halt its practice activities, make an announcement and not accept Auditing applications from it for five years;
(2) if fraudulent information is provided in the course of applying for an Auditing permit, approval shall be withheld and Auditing applications from the perpetrator shall not be accepted for five years;
(3) if an overseas accounting firm has terminated its operations or had its practice qualifications revoked by the relevant overseas authority but persists in conducting Auditing in mainland China on the strength of the Auditing permit that it originally secured, the finance department shall order it to halt its practice activities and make an announcement; with respect to its certified public accountants that have practised, an announcement shall be made and Auditing applications relating thereto shall not be accepted for five years;
(4) if an overseas accounting firm fails to conduct its Auditing activities in keeping with the time, place, personnel and/or the list of Domestic Organisations indicated on the Auditing application and fails to report the same to the examination and approval authority in a timely manner, it shall be ordered to rectify the matter within a specified period of time; if the circumstances are serious, an announcement shall be made and its Auditing applications shall not be accepted for five years;
(5) if an overseas accounting firm fails to report its Auditing activities for the record in accordance with provisions, it shall be ordered to rectify the matter within a specified period of time; if the circumstances are serious, an announcement shall be made and its Auditing applications shall not be accepted for five years;
(6) if an overseas accounting firm and a Domestic Organisation or domestic individuals violate confidentiality laws or regulations of China, they shall be ordered to rectify the matter within a specified period of time and no further Auditing applications will be accepted from the overseas accounting firm; if a criminal offence is suspected, the case shall be transferred to the judicial authorities for handling.
Article 13: These Provisions shall be effective as of the date of issuance.
Article 14: The Tentative Provisions for the Temporary Conduct of Auditing in China by Foreign Accounting Firms (Cai Kuai Xie Zi [1993] No.119) issued on December 6 1993, the Supplementary Provisions for the Tentative Provisions for the Temporary Conduct of Auditing in China by Foreign Accounting Firms (Cai Kuai Xie Zi [1993] No.134) issued on December 27 1993, the Tentative Provisions for the Temporary Conduct of Auditing in Mainland China by Accounting Firms from Hong Kong, Macao and Taiwan (ref. Cai Kuai Xie Zi [1994] No.81) issued on May 26 1994, the Circular on the Use of the New Version of the Temporary Auditing Permit (Cai Ban Kuai [2003] No.10) issued on March 10 2003, the Supplementary Provisions for the Tentative Provisions for the Temporary Conduct of Auditing in Mainland China by Accounting Firms from Hong Kong, Macao and Taiwan (ref. Cai Kuai [2003] No.33) issued on November 26 2003, the Circular on Extending the Term of Validity of the Permits for the Temporary Conduct of Auditing (Cai Kuai [2005] No.21) issued on November 28 2005 and the Circular on Extending the Term of Validity of the Permits for the Temporary Conduct of Auditing in Mainland China by Accounting Firms from Hong Kong and Macao (Cai Kuai [2008] No.12) issued on September 16 2008 by the Ministry of Finance shall be repealed from the date of implementation hereof.
Schedule 1: Application by an overseas accounting firm to Temporarily Conduct Auditing in Mainland China
Schedule 2: Form for Information on the Overseas Client and the Domestic Organisation
Schedule 3: Form for Information on the Certified Public Accountants and Other Relevant Overseas Working Personnel Who Are to Be Assigned
Schedule 4: Auditing Report of an Overseas Accounting Firm
财会 [2011] 4号
第一条 为了进一步规范境外会计师事务所在中国内地临时执行审计业务的行为,根据《中华人民共和国注册会计师法》和其他有关法律法规,制定本暂行规定。
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