09.08.10 01:56 Age: 8 yrs
New Measures on the Financial Management of Accounting Firms Announced
To improve the management of Accounting Firms, the Ministry of Finance (MOF) has announced an “Interim Measures on the Financial Management of Accounting Firms” (Measures) recently. The Measures is stipulated based on the “Accounting law of the PRC” and the “Law of the PRC on Certified Public Accountants”, consists of 26 articles, and takes effect on January 1, 2011.
The Measures can be concluded from three main aspects:
Financial management of the accounting firm
It is required in the Measures that the accounting firms should establish a centralized management system of the whole firm’s accounting, including the overall control of the auditing activities, use of capital as well as the income and expenditure. Then, the consistent financial management within the accounting firm can be realized and the lack of coordination of different departments can be avoided.
Restrictions for the Accounting firms and their accountants
The transaction of the tradable securities of the accounting firms and their accountants shall comply with the relevant legislation and statutory requirement of independency. It is also prohibited of the accounting firms to give guarantee for other enterprises, organization, or individuals. Other restrictions include the avoidance system in the appointment of accounting staff, the debt management of the accounting firm, etc.
Financial reports of the accounting firm.
In the end of the Measures, it is requested that the accounting firms should make annual financial statement each year and report it to the related organizations and government departments. Accounting firms shall also adopt an effective file management system and internal supervision system according to relevant stipulations.
“Government’s legislation on the internal management of the accounting firms is due to the specialty of the accounting industry. The release of the Measures will help to protect the rights of the other party in the transaction with the accounting firms and play an important role in the regulation of the accounting market.” commented Junbo Hao, Senior Attorney of Lehman, Lee & Xu.
As a prominent Chinese corporate law firm and trademark and patent agency, Lehman, Lee & Xu has always maintained a focus on the issues of finance law. The firm has also been recognized as one of the top full service as well as intellectual property firms in China by several international magazines. It now has offices in Beijing, Shanghai, Shenzhen, Hong Kong, Macau, and Mongolia. The firm is managed by Mr. Edward Lehman, a leading expert on corporate law with over twenty years of practice experience in Mainland China.
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