Recently, the Ministry of Finance and the China Banking Regulatory Commission have jointly promulgated the Circular on Further Standardizing the Bank Confirmation Letters and Replies (the "Circular") for implementation as of October 1.
Under the Circular, certified public accountants shall select the appropriate bank confirmation request according to the specific business needs and ensure the completeness, standardization and validity of the confirmation letter; and banks shall strictly standardize the bank confirmation letters and replies and shall confirm, fill in with the relevant information on, sign and seal the original bank confirmation request signed by the audited entity in principle. As required by the Circular, banks shall build and improve the internal control over the bank confirmation letters and replies in eight aspects including "definition of the working process of reply, establishment of the corresponding authorization mechanism and balance mechanism and achievement of the separation of incompatible duties", and ensure the effective operation of such internal control. In addition, the Circular specifies that banks are encouraged to upgrade and extend the functions of the information system to realize the concentrated show of all the information on the same client, and shall strengthen the management over security and authorization of the information system.