• Register
Return to: Home > News > Regulation > China to launch internal control system

China to launch internal control system

China plans to create and implement a new internal control system for companies to boost operating standards and cushion the effects of any future financial crisis.

The new system, to be implemented within 10 years, will have basic rules and guidelines aimed at preventing companies from feeling the effects of the financial crisis as well as helping to raise competency levels of companies, enhance their ability to avoid risk and improve the level of operating standards.

The new system will also help drive revenue into the audit market by generating more internal control compliance work for auditors.

The Chinese Ministry of Finance (MoF) accounting regulatory department director general Lui Yuting revealed the plans to The Accountant at a Chinese accounting reform briefing held by the Institute of Chartered Accountants of Scotland.

“To implement the system, [companies] will need CPA’s to audit the whole process so it is the new emerging point for the CPA industry to grow,” Yuting said.

The MoF has now completed the first phase of the system and will start to the implement the system domestically in public companies, and then in Chinese and public companies that operate overseas.

The MoF, working in co-operation with the National Audit Office, the China Securities Regulatory Commission, the China Banking Regulatory Commission and the China Insurance Regulatory Commission, is currently training senior mangers on the new system.

Yuting confirmed the MoF’s plans to challenge the position of the Big Four in China by developing 5-10 ‘super big’ domestic public accounting firms is on track.

“We now have about 12 firms and they have already formed to the initial scale with the profits of the CPA firms now reaching CYN500m ($75m) each. Our target is to reach CYN2-3bn in five years.”

Yuting said he is confident the goal is achievable in the next five years.

The ultimate aim of the proposals is to double the size of the public accounting industry to CYN60bn within the next decade.

 

Related article

Details revealed about Chinese expansion plans

Top Content

    ARGA team, assemble!

    The new top team has been named that will see in root-and-branch reform at the Financial Reporting Council (FRC) as it transforms into the Audit, Reporting and Governance Authority (ARGA). Will the new duo be as dynamic as some are hoping? Robin Amlôt reports.

    read more

    FASB: a quest for simpler standards

    FASB chair Russell Golden addressed the IMA 2019 Annual Conference and Expo at the Sheraton San Diego Hotel and Marina, California, on 18 June. IMA immediate former chair-emeritus Alex Eng acted as moderator. Joe Pickard reports.

    read more

    The future of audit, and how to get there

    Two recent reports peer into the future of the audit profession. One analyses what an audit should offer, while the other looks at how the audit process will be carried out. Robin Amlôt takes a closer look at both.

    read more

    EFAA elects new president, focuses on digital future

    EFAA’s new president, Salvador Marin, outlined his key priorities for the next two years at the organisation’s 2019 annual general meeting, while outgoing president Bodo Richardt offered advice. Robin Amlôt reports.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.