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China to facilitate healthy development of accounting industry

Updated: Aug 23,2021 15:16

The State Council issued a circular on Aug 23, aimed at further standardizing the financial auditing order, in an effort to promote the healthy development of the accounting industry, in particular certified public accountants (CPA).

According to the circular, regulation on accounting firms in the securities business should be cemented. The financial auditing authority should push forward the formation of a professional law-enforcement inspection mechanism, introduce supervision and inspection measures for administrating accounting firms, strengthen big data analysis of financial supervision, and conduct targeted crackdowns on financial fraud.

The circular said the authority should take stern actions against unlawful acts, expose cases and punish malpractices, including any unlicensed business activities of accounting firms, nominal practices of certified public accountants, online transaction of auditing reports, unqualified practices, and exposing confidential and sensitive information.

Efforts should be made to speed up the establishment of laws and fundamental systems in the industry of certified public accountants, the circular said.

An interdepartmental cooperation mechanism should be established to usher in flexible linkage and collaboration between financial accounting supervision and supervision in other fields.

And the authority should reinforce the implementation of a national unified accounting system, strengthen informationization construction and build a unified supervision and regulation platform for the CPA industry, provide unimpeded channels for public complaints and tipoffs, and establish a unified platform to receive whistle-blowing cases.

The criterion system and professional ethics system for auditing should also be further improved, said the circular.

The authority should navigate the reinforcement of internal management of accounting firms and cultivate some domestic leading accounting firms with international influence. Quality recruiting mechanism should be further carried out. Accounting firms’ risk-taking capacity should be enhanced, and the professional liability insurance system should be improved. Also, professional training and education for certified public accountants should be further developed.

In addition, further efforts should be made to regulate banks' confirmation service, beef up the construction of a digital platform for such services.