Beijing, 5 May (ZXS) -- China's Ministry of Finance, the State-owned Assets Supervision and Administration Commission of the State Council, and the China Securities Regulatory Commission recently jointly issued the "Administrative Measures for the Selection and Hiring of Accounting Firms by State-Owned Enterprises and Listed Companies" (hereinafter referred to as the "Selection and Recruitment Measures").

The Measures require state-owned enterprises and joint stock limited companies whose shares are listed and traded on domestic stock exchanges to accelerate the improvement of the relevant systems for the selection and employment of accounting firms, and standardize the selection and employment of accounting firms. The Measures shall come into force on the date of issuance.

The relevant responsible persons of the Accounting Department of the Ministry of Finance, the Financial Management and Operation Bureau of the State-owned Assets Supervision and Administration Commission of the State Council, and the Accounting Department of the China Securities Regulatory Commission introduced on the 4th that at present, there are still problems such as imperfect systems and irregular processes in the selection and employment of accounting firms by state-owned enterprises and listed companies, which restrict the improvement of audit quality. The Measures mainly regulate four aspects:

First, curb vicious competition and highlight quality orientation. The score weight of the quality management level should not be less than 40%, and the score weight of the audit fee quotation should not be higher than 15%.

The second is to improve the rotation regulations and strengthen the independence requirements. State-owned enterprises (including state-controlled listed companies) have been engaged by the same accounting firm for a continuous period of not more than 8 years, and if it is truly necessary, it may be extended to no more than 10 years according to regulations, after which rotation must be carried out. For audit project partners and signing certified public accountants, the Measures stipulate rotation requirements and a cooling-off period system under different circumstances.

The third is to promote fair competition. The Selection and Recruitment Measures have open indicators, clear rules, and set standards that apply to all accounting firms legally established in China, without discrimination. Enterprises shall not restrict or exclude potential accounting firms with unreasonable conditions, and shall not tailor the selection conditions for individual accounting firms.

The fourth is to consolidate the responsibility of the audit committee. The audit committee should focus on the following matters: the possibility of unreasonable changes in the accounting firm, the appointment of an accounting firm with insufficient competence, doubtful audit independence, large changes in audit fees, and rotation of accounting firms and key personnel. (End)