The Chinese Institute of Certified Public Accountants ("CICPA") has recently distributed the Circular on Initiating Inspections of Quality of Practices of Accounting Firms with Securities Qualification in 2019 (the "Circular").
The Circular expressly states that the CICPA has randomly selected a number of accounting firms with securities qualification that will undergo inspections in 2019, including "BDO China Shu Lun Pan Certified Public Accountants LLP" and "Ruihua Certified Public Accountants LLP". Further, the Circular states that inspections will be carried out on the spot among the targeted accounting firms with securities qualification, from early July till early August; findings obtained during the on-the-spot inspections will be then discussed in late August, while work on dealing with the inspection results will be completed by the end of December. In addition, the Circular stresses that during the inspections of business items, major attention should be paid to audit business, overseas audit business, and other audit business related to local governments' debt financing and outbound investment and financing funds, of high-risk public interest entities, and major efforts should be made to look at key fields and material events, such as risk assessment, fraudulent practices, information system audit, group audit, and serious asset impairment (including goodwill impairment).