PRC statutory audit

Knowing a sound financial reporting system plays a key role in the process of economic
development, our audit specialists examine your financial statements and accounting
records to give you an independent opinion whether relevant accounting standards and
generally acceptable accounting principles under the PRC GAAP have been followed in all
material aspect on reports to shareholders, directors, trustees and others.

Our traditional role as auditors also puts us in an ideal position to build up a clear
understanding of your business, enabling us to assist you with the all-important obligation
of meeting applicable reporting requirements as well as to help you identify the major risks
and opportunities in your strategies and activities.

PRC statutory audits are required for all Foreign Invested Enterprises ("FIEs") each year
to review the compliance with laws and regulations on accounting, finance, tax, foreign
exchange, social welfare, customs, administration of industry and commerce, etc.
Our services includes

•              Capital verification
•              Annual financial statement audit
•              Annual foreign exchange reporting review
•              Annual tax verification for Corporation Income Tax
•              Liquidation audit

 

Capital verification

Capital verification report is the basic document required for the legal registration of the
incorporation and also an issuance of capital contribution certificate to the investors. 

All enterprises including domestic company, foreign investment enterprises and joint
stock companies are required by the relevant PRC laws to have their capital verified by
CPAs.

Capital verification is not only performed and required on the capital contributed upon
the formation of a company, but also in respect of any subsequent changes in the
amount of capital, or changes in the ownership of a company.

Capital verification means more than just checking that a certain amount of assets has
been injected into the enterprise.  When performing verification work, we verify that
the following aspects of the contributions are in accordance with the relevant
regulations, the Articles of Association and the agreement for the establishment of the
enterprise:

•                           The identity of the investor or investee enterprise
•                           The forms of capital contribution, such as cash, tangible and intangible assets
•                           The proportion of capital contributed by each investor
•                           The deadlines by which the contributions have to be made
•                           The type of currency contributed

 

Annual financial statement audit

Annual financial statement with report of auditors is required when each foreign
investment enterprise in China prepares annual examination executed by several
government authorities such as Administration of Industry and Commerce. Each
foreign investment enterprise in China shall submit annual financial statement with
report of auditors together with other examination documents of last calendar year to
government authorities before the deadline 30 June every year.

Annual financial statement with report of auditors including

•                       Report of auditors
•                       Balance sheet as at 31 December
•                       Income statement for the year ended 31 December
•                       Cash flow statement for the year ended 31 December
•                       Change of Equity for the year ended 31 December
•                       Notes to accounting policy and financial statements

 

Annual foreign exchange reporting review

Annual foreign exchange reporting review is required when each foreign investment
enterprise in China prepare annual examination of foreign exchange position. Each
foreign investment enterprise in China shall submit balance of payments statement with
review report of auditors with other examination documents of last calendar year to
local branch of State Administration of Foreign Exchange before the deadline 30 June
every year.

 

Annual tax verification for Corporation Income Tax

Sometimes annual tax verification report issued by a CTA firm is required for a foreign
investment enterprise in China prepare year-end settlement of Corporation Income Tax
before 31 May each year for annual tax return of last tax year.

 

Liquidation audit

Just as the capital verification is a requirement for legal registration of the incorporation
of a foreign investment enterprise in China, the liquidation audit is a prerequisite for
deregistration from the local Administration of Industry and Commerce. 

The purpose of liquidation audit is to clarify the financial situation at termination of
liquidation, the profit and loss for liquidation period and the result of liquidation. The
liquidation audit cares for whether that PRC Company Law and all other relevant laws
and regulations are adhered to, whether the liquidation activities follows the decision of
the liquidation committee, whether disposal of assets, collection of debts, discharge of
liabilities and termination of contract protect the rights of employees, governments and
creditors.