Condition of Applying for Securities Futures Business Undertaking Qualification of Accounting Firms Amended

Recently, Ministry of Finance (MOF) and China Securities Regulatory Commission (CSRC) have jointly made an announcement regarding iamended condition of applying for securities futures business undertaking qualification of accounting firms.

Officials from MOF and CSRC said, both departments have commenced on research work of this emendation since the beginning of the year 2011. After extensive research, conscientious calculation and repeating advice sought, new condition of application has been established and replenished with relevant regulatory content.

According to calculation and research results, rule of income has been amended from "previous year audit income has to be no less than RMB 16 million" to "previous year income has to be no less than RMB 80 million with no less than RMB 60 million of audit business contribution." To assure the quality of CPA teams meet the audit requirement of listed companies, the new rule says the eligible accounting firm has to have at least 200 CPAs and no less than 120 CPAs has been qualified within recent five year and in continuous practice. To facilitate risks matching with responsibilities of accounting firms, the organizational forms are limited to special general partnership and general partnership. To those who have the qualification of undertaking securities futures business, it is a two-year transition requirement to accomplish this conversion. Moreover, in order to enhance the dynamic assessment of those who are qualified, the new rules require them to have no less than five financial report audit business of listed company each year from the third year once qualified, or the audit income of listed company shall not be less than RMB 5 million annually.

Experts believe this emendation is beneficial to upgrade the quality of accounting information in the capital market by requiring accounting firms to improve their internal governance, practice ability, anti-risk capability, quality control and internal management.

Disclaimer:

The information published above is in summary form and intended for general guidance only. This information is not intended as legal, accounting or other professional advice and should not be relied upon as such. Neither Reanda CPAs nor any related entity shall have any liability to any person or entity that relies on the information contained in this publication.