The Chinese Institute of Certified Public Accountants ("CICPA") has recently prepared and published the 2019 Work Plan for Inspections of the Quality of Practice of Nationwide Accounting Firms (the "Plan") and simultaneously distributed a circular to clarify arrangements for relevant work.
The circular clearly states that on-the-spot inspections will be carried out for accounting firms with the qualification for securities business from early July to early August, and discussions of inspection findings and work on disciplinary actions will proceed from August to the end of December, adding that each provincial institute of certificated public accounts (CPA) shall be responsible for inspections for accounting firms within the local administrative region, and submit relevant documents and materials, including "the work plan for inspections of quality of practice of accounting firms within the local administrative region and the list of the inspected accounting firms in 2019" within the prescribed time period. The Plan notes that all levels of CPA institutes shall focus their attention on "the quality control system" and "business items" during the inspections. They are required to identify the deficiencies in quality control, according to clues gathered together in the routine regulatory process and self-check reports prepared by accounting firms. The inspections will target business reports issued by the accounting firms after the most recent round of inspections conducted by all levels of CPA institutes, particularly those issued in the most recent year, while inspections of business items will focus on whether they follow the risk-oriented audit principle during the business process and whether they have exercised professional skepticism.