The Ministry of Finance (MOF) is in charge of the accounting and CPA industries in China. In accordance with the Accounting Law of the People’s Republic of China and the Law of the People's Republic of China on Certified Public Accountants, MOF is responsible for the national administration of accounting as well as supervision and guidance of CPAs and accounting firms. The Supervision and Evaluation Bureau of MOF (the Bureau) is in charge of the administrative enforcement of the Accounting Law and the Certified Public Accountants Law, supervising and inspecting the quality of corporate accounting information and accounting firm practices. In accordance with the authorization of the State Council, the Bureau is also responsible for cross-border communication and cooperation in accounting and auditing supervision.
The Bureau’s supervision has the following characteristics:
First, it is independent. The Bureau has established an accounting industry supervision system in which government administrative supervision and industry self-discipline management are mutually independent and coordinated. China is among those countries that have long implemented government supervision. The supervision expenditures are all funded by the public budget. The inspectors are civil servants in the finance departments and do not charge any fee payable by agencies or enterprises. The supervision model has achieved great independence.
Second, it is efficient. Corporations’ accounting information and the agencies’ auditing quality are two sides of the same coin, and both are indispensable. Through two-way extended inspection of agencies’ practice and the audited company's accounting information, major accounting fraud and audit failures can be better prevented, resulting in sound maintenance of market order and prevention of financial risks.
Third, it is comprehensive. Each year, MOF organizes 35 supervision bureaus and 31 local finance departments (bureaus) to carry out inspections on the quality of enterprise accounting information and the practice of accounting agencies in accordance with the guideline of “randomly selected inspectors and randomly selected entities as well as the public release of inspection results.” The rotational design has enabled MOF’s supervision network to cover the whole country and ensure comprehensive review of the enterprise accounting information and the CPA industry.
While conducting domestic accounting inspection the Bureau has actively promoted cross-border exchanges and cooperation in accounting and auditing matters. Dedicated to the spirit of peace, development, cooperation and win-win outcomes, MOF has always adhered to the principle of "mutual respect, equality and mutual benefit", highly valued cross-border accounting and auditing cooperation with countries and major economies around the world, and supported the establishment of interdependent regulatory cooperation mechanisms on the basis of respect for sovereignty and foreign laws. At present, MOF has signed Memorandum of Understanding with many regulatory authorities and carried out cooperation and exchange with 22 countries and regions including the Hong Kong and Macao Special Administrative Regions, the US, Canada, the UK, France, Japan, BRICS member countries such as Russia, and ASEAN member countries such as Singapore and Malaysia. The efforts have promoted the establishment of pragmatic and flexible mechanisms regarding accounting and auditing supervision, and created a good environment for cross-border investment, financing and cooperation for both Chinese and foreign enterprises.
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