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The inspection of accounting firms in 2024 is about to begin.
Recently, the Chinese Institute of Certified Public Accountants (hereinafter referred to as the Chinese Association of Certified Public Accountants) issued the work Plan for the practice quality Inspection of National Accounting firms in 2024 (hereinafter referred to as "the Plan"). According to the Plan, the Supervision and Evaluation Bureau of the Ministry of Finance will lead the inspection of accounting firms engaged in securities services on the record. The local injection association will inspect the non-securities firms within its jurisdiction, with an inspection coverage of no less than 20%.
It is reported that those with large business scale, suspected of unfair and low-price competition, and poor quality of practice will be selected for spot checks. For the problems found, the relevant firms and certified public accountants will be punished. By the end of last year, there were 10665 accounting firms in China.
Check that the coverage rate is not less than 20%
The purpose of this inspection is to implement the requirements for the deployment of special actions for financial and accounting supervision, strengthen the self-regulatory role of industry associations, further strengthen the self-regulatory supervision of the industry, give better play to the supervisory role of certified public accountants, and promote the high-quality development of the industry.
It is reported that as of December 31, 2023, there are 10665 accounting firms (9305 general offices and 1360 branch offices) in China. As of April 2024, a total of 114 firms (hereinafter referred to as securities exchanges) have been registered to engage in securities service business.
According to the plan, in accordance with the requirements for the deployment of special actions for financial and accounting supervision, the Supervision and Evaluation Bureau of the Ministry of Finance will organize the Regulatory Administration and the China injection Association to inspect securities firms engaged in securities service business on the record.
The Institute of Certified Public Accountants of all provinces, autonomous regions and municipalities directly under the Central Government and Shenzhen Institute of Certified Public Accountants may, in accordance with the relevant requirements of the "measures to strengthen the Joint Supervision of the Certified Public Accountants Industry" (Finance Office Supervision (2020) No. 10), in conjunction with local financial departments (bureaus), carry out practice quality inspection of non-securities firms in their respective administrative areas, and the inspection coverage rate is not less than 20%. According to the needs of the work, the local injection association may include the local securities branch and the securities that have not yet carried out the annual report audit of listed companies into the scope of inspection.
The "plan" states that the local injection association should, on the basis of periodic inspection, according to the development stage and actual situation of local firms, establish and improve a "double random, one open" inspection mechanism in which inspection objects are randomly selected, inspectors are randomly selected, and inspection conditions and results are made public to the public. The local injection association shall set up a practice quality inspection account to ensure full coverage of the inspection of the firms in the administrative area within the 5-year cycle.
Problems should be punished if they are found.
According to the "Plan", when the local injection association determines the practice quality inspection list in 2024, it should not only ensure the necessary coverage of spot checks, but also increase the intensity of spot checks on key objects.
Key targets include those with large business scale, major merger, division, reorganization or newly approved establishment, or major changes in the type of business.ThebaccaratSuspected of unfair low-price competition, the rapid growth of business volume, and the number of undertaking business obviously does not match the human resources of the firm.
It also includes those found in daily supervision that the practice quality is poor, punished by regulators or reported more (including the practice quality issues referred by the Central injection Association or other units to the local injection Association and online sale audit reports, etc.); there are more cooperation projects with foreign firms and large domestic firms; firms that provide annual financial statement audit services for the comprehensive evaluation of the 100 ranked firms by the China injection Association.
"focus, focus on issues, pay attention to effectiveness, focus on audit quality issues such as failure to maintain professional skepticism, failure to perform necessary audit procedures, failure to obtain sufficient and appropriate audit evidence, and inappropriate audit opinions," the program said.
After the end of the on-site inspection, the China injection Association and the local injection Association should strictly examine the demonstration of the results and objectively evaluate the nature and severity of the problems found by the inspection. For firms that are found to have major defects in the quality management system during the inspection, the local injection association shall strictly punish the relevant firms and certified public accountants in strict accordance with the measures for punishing illegal practices of members of the Chinese Institute of Certified Public Accountants and the local implementation rules. The local injection association that carries out joint inspection with the local financial departments shall conduct a joint examination of the problems found in the inspection and make administrative penalties and industry punishments respectively. For the specific violations found by the inspection, the China injection Association and the local injection Association shall announce to the public by means of inspection notices and other means.
The Program also strengthens the follow-up educational assistance to the inspected firms. The China injection Association and the Local injection Association should fully communicate with the firm on the quality management system, professional ethics, weak links of integrated management and practice quality found by the inspection, and put forward targeted and operable suggestions to help the firm improve the quality management system and improve the practice quality. Through inspection and return visits, warning education, special seminars, classified training, interview and communication and other self-discipline means and methods, follow up the rectification and reform of the inspected firms in previous years, and consolidate the effectiveness of the inspection work.