The Chinese Institute of Certified Public Accountants ("CICPA") has recently issued the Opinions on Strengthening the Self-Regulation of the Quality of Practice of Accounting Firms Providing Services to the Securities Business (Draft for Comment) (the "Draft ") to solicit comments from the industry before August 14, 2020.
The main contents of the Draft are as follows: First, enrich regulatory means; second, enhance regulation; and third, expand regulatory functions. The Draft requires a full regulation under the scheme of "double-random inspections and disclosure of inspection results", the optimization of periodic inspection arrangements, and the strengthening of inspection on accounting firms providing services to the securities business for the first time and partners of accounting firms who have a big portfolio to give focus to the regulation. The Draft also requires to improve the penalty and appeal mechanism, optimize the workflow, and enhance the accountability of key position holders of accounting firms including chief partners, partners in charge of the audit business, partners in charge of quality control and partners of audit projects. Furthermore, the Draft requires better disclosure of regulatory information including routine regulation and penalty information, improve information transparency, and enhance the deterrent effect of penalty.