The Chinese Institute of Certified Public Accountants ("CICPA") has recently formulated and released the Questions and Answers to the Auditing Standards for the Certified Public Accountants of China No. 14 – Key Audit Items (the Q&A No.14) and the Questions and Answers to the Auditing Standards for the Certified Public Accountants of China No. 15 – Other Information (the Q&A No.15), both immediately effective from the issue date.
The Q&A No.14 provides guidance as to questions about the implementation of standards for key audit items when financial statements are audited for the initial public offering (IPO) purpose, while the Q&A No.15 provides clarity on whether standards in respect of other information apply to the prospectus of a company planning an IPO. Further, the Q&A No.14 expressly states that when a certified public accountant is auditing financial statements prepared for the IPO purpose, he or she may decide on and disclose key audit items under the following principles. First, standards on key audit items shall apply to each period during the entire reporting period. Second, key audit items shall be determined respectively for each period, but those of several periods may be disclosed together. Third, the disclosure of key audit items during each period in the audit report shall depend on actualities of each period. Fourth, merely key audit items relating to certain periods will be disclosed in the audit report.