Administrative Measures for the Practice Licensing and the Supervision of Accounting Firms
Administrative Measures for the Practice Licensing and the Supervision of Accounting Firms
Administrative Measures for the Practice Licensing and the Supervision of Accounting Firms
Order of the Ministry of Finance of the People's Republic of China No.89
August 20, 2017
The Ministry of Finance has revised the Interim Measures for the Examination, Approval and Supervision of Accounting Firms (Order of the Ministry of Finance No.24), and the revised Administrative Measures for the Practice Licensing and the Supervision of Accounting Firms have been adopted upon deliberation at the ministerial office conference. These Measures are hereby promulgated and shall enter into force as of October 1, 2017.
Minister Xiao Jie
Administrative Measures for the Practice Licensing and the Supervision of Accounting Firms
Chapter I General Provisions
Article 1 These Measures have been formulated in order to standardize the practice licensing of accounting firms and their branches, to strengthen the supervision and management of accounting firms and to promote the healthy development of the certified public accountants industry, in accordance with the Law of the People's Republic of China on Certified Public Accountants (hereinafter referred to as the "CPA Law"), the Partnership Enterprise Law of the People's Republic of China, the Company Law of the People's Republic of China and other laws and administrative regulations.
Article 2 These Measures are applicable to the administration, supervision and guidance over accounting firms and CPAs by the Ministry of Finance as well as the financial departments of all provinces, autonomous regions and municipalities directly under the central government (hereinafter referred to as the "provincial financial departments").
Article 3 The provincial financial departments shall, in accordance with the principles of openness, fairness, impartiality, convenience and efficiency, handle the affairs of practice licensing of the accounting firms in their jurisdiction according to the law, and supervise and manage the accounting firms in their jurisdiction.
The Ministry of Finance and the provincial financial departments shall strengthen the policy guidance on the accounting firms and CPAs, create a fair accounting market environment, guide and encourage the accounting firms to constantly improve their internal governance and achieve orderly development.
The provincial financial departments shall promote online government administration and facilitate the practice licensing application and alteration filing of accounting firms.
Article 4 The accounting firms and CPAs shall abide by the laws and administrative regulations, follow the professional ethics and observe the practice standards and rules.
Article 5 The accounting firms and CPAs shall be independent, objective and impartial during practice, which shall be protected by law with no unlawful interference from any entity or individual allowed.
Article 6 The accounting firms may adopt the form of general partnership, special general partnership or limited liability company.
The accounting firms engaging in the securities service business or other specific businesses related to public interests as stipulated by laws and administrative regulations shall adopt the general partnership or special general partnership form, and accept the supervision from the Ministry of Finance.
Chapter II Acquisition of Practice Licenses of Accounting Firms
Article 7 Accounting firms shall apply for a practice license from the provincial financial departments where they are located within 60 days upon receiving the business licenses.
The accounting firms that have not obtained a practicing license shall not carry out business activities in the name of accounting firm, and shall not engage in the business stipulated in Article 14 of the CPA Law (hereinafter referred to as "the CPA's statutory business").
Article 8 For application of a practice license, a general partnership accounting firm shall possess the following conditions:
1. Having more than two partners, who meet the conditions stipulated in Article 11 of these Measures;
2. Having a written partnership agreement;
3. Having a place of business.
Article 9 For application of a practice license, a special general partnership accounting firm shall possess the following conditions:
1. Having more than 15 partners of CPAs, who meet the conditions stipulated in Article 11 and Article 12 of these Measures;
2. Having more than 60 CPAs;
3. Having a written partnership agreement;
4. Having a place of business;
5. Other conditions prescribed by laws, administrative regulations or the Ministry of Finance under their authorization.
Article 10 For application of a practice license, a limited liability accounting firm shall possess the following conditions:
1. Having more than five shareholders, who meet the conditions stipulated in Article 11 of these Measures;
2. Having registered capital of no less than CNY300, 000;
3. Having articles of association jointly formulated by the shareholders;
4. Having a place of business.
Article 11 Except for the provisions of Article 12 of these Measures, the partners (shareholders) of an accounting firm shall meet the following conditions:
1. Having CPA qualification;
2. Not having been subject to administrative penalty for practice within three years before becoming a partner (shareholder);
3. Having engaged in auditing business in accounting firms for the past three consecutive years with no less than ten years of total business hours in auditing, or having engaged in auditing business for the past five consecutive years in accounting firms after obtaining a CPA qualification;
4. Having not been given to decisions of not accepting, not approving the application of practicing licenses or revoking the practicing license by the provincial financial departments due to fraud, bribery or other improper means within three years before becoming a partner (shareholder);
5. Having a stable domicile in the territory with a living term of no less than six months per year, and having a recent continuous residence record for at least five years.
In the case of CPA qualification revocation or cancellation due to administrative penalties or criminal penalties, the period of engagement in auditing business before the revocation or cancellation of practicing qualification shall not be included in the accumulated years stipulated in Item 3, Paragraph 1 of this Article.
Article 14 Accounting firms shall strengthen the practice quality control, establish and improve the system for the rights and responsibilities of partners (shareholders), signing CPAs and other employees in the practice quality control.
The chief partner (chief accountant) takes the major responsibility for the quality of the practice of an accounting firm. The managing partner (shareholder) in charge of the auditing business and the managing partner (shareholder) in charge of quality control take the direct management responsibilities for the quality of auditing business of the accounting firm. And the auditing project partner (shareholder) is directly responsible for the auditing quality of the specific business project undertaken by him or her.
Article 15 Where a CPA acts as a partner (shareholder) of an accounting firm and involves the transfer of a practicing relationship, he/she shall first complete the move-out procedure from the original accounting firm with the CPA Association of the provinces, autonomous regions and municipalities directly under the central government (hereinafter referred to as "the provincial CPA association"). If he/she is also a partner (shareholder) of the original accounting firm, withdrawal or equity transfer procedures shall be completed first in accordance with the relevant laws, administrative regulations as well as the partnership agreement or the articles of association of the company.
Article 16 The name of an accounting firm shall conform to the relevant provisions of the State. Accounting firms shall not use names including the trade names of other accounting firms that have obtained a practice license without consent.
Article 17 An accounting firm shall submit the following materials to the provincial financial department at the place where the firm is located for applying for a practice license:
1. The application form for a practice license of an accounting firm;
2. Materials of practice experience of the accounting firm's partners (shareholders) that meet the relevant requirements;
3. A summary of information on the CPAs proposed to practice in the accounting firm;
4. A copy of the business license;
5. A copy of the written partnership agreement or the articles of association of the company;
6. A copy of the property certificate or proof of use of the place of business.
If a partner (shareholder) is a foreigner or lives overseas, an effective domicile proof, and a valid certificate and a commitment letter of residence time shall also be submitted in accordance with the provisions of Item 5, Paragraph 1 of Article 11 and Item 1, Paragraph 3 of Article 13 of these Measures.
For the accounting firms newly established due to merger or division, merger agreement or division agreement shall also be submitted at the time of application.
The applicant shall be held responsible for the authenticity, accuracy and completeness of the contents of the application materials.
Article 18 The provincial financial department shall examine the application materials submitted by the applicant. If the application materials are not complete or do not conform to the legal forms, the provincial financial department shall inform the applicant of the entire contents that need supplement and/or correction on site or within five days upon receiving the application materials on a one-off basis.
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