The Development Of CPA Industry Meets The Top Deployment, And The Legal Responsibility Investigation Of Financial Fraud Will Be Strengthened

The healthy development of CPA industry meets the top-level document deployment.

On August 23, the general office of the State Council issued the opinions on further standardizing the order of financial audit and promoting the healthy development of the CPA industry (hereinafter referred to as the opinions), which said that it would strengthen the analysis of big data of financial supervision, crack down on financial fraud, crack down on accounting audit violations, find and deal with them, and achieve "zero tolerance". We should promote the formation of a specialized law enforcement inspection mechanism and carry out effective daily supervision on accounting firms engaged in securities business.

It is worth mentioning that in view of the audit problems faced by China conceptual shares going public in the United States recently, the opinion also proposes to carry out cross-border accounting and audit supervision cooperation in accordance with laws and regulations, safeguard the national economic information security and the legitimate rights and interests of enterprises, and enhance international credibility and influence.

Greatly raise the standard of punishment

According to the data released by the Ministry of finance, by the end of July 2021, there were 111000 certified public accountants and 8782 accounting firms in China. The annual business income of the industry exceeded 100 billion yuan, providing audit assurance and other business services for more than 4000 listed companies, more than 10000 new third board Enterprises and more than 4 million enterprises and institutions.

"The overall development of the industry is good, which has played an important role in maintaining the order of the capital market and the public interest, and improving the quality of accounting information and economic efficiency. However, there are also some problems, such as inadequate performance of the" gatekeeper "duties of accounting firms, insufficient industry supervision and law enforcement, and distortion of enterprise financial accounting information Financial fraud and other phenomena of listed companies occur from time to time. " In the document, the State Council made a judgment on the current situation of the development of China's CPA industry.

Therefore, the "opinion" also proposed that the punishment standard will be greatly improved, and the legal responsibility for financial fraud will be strengthened. The relevant person in charge of the Ministry of finance also disclosed on the same day that it was speeding up the revision of the "accounting law" and "certified public accountant law", focusing on increasing the punishment of financial fraud, standardizing financial management, strengthening internal control, and standardizing enterprise accounting behavior from the source.

It is worth mentioning that the Opinions also require strict supervision of accounting firms and listed companies, and investigate the audit responsibility and accounting responsibility of financial fraud according to law. Strengthen financial supervision, big data analysis, and accurately crack down on financial fraud.

This is also regarded by the market as the embodiment of improving the quality of Listed Companies in China in recent years.

Tian Lihui, President of the Institute of financial development of Nankai University, pointed out that the State Council's standardization of financial audit order is an important measure to improve the quality of Listed Companies in China. Whether an enterprise can be listed, the value evaluation of listed companies and the allocation of market-oriented resources depend on the information disclosed by the listed companies through the hands of professional intermediaries. The core of listed company information is financial information. Therefore, strict supervision of accounting firms is the key to improve the quality of information disclosure of listed companies.

To be specific, it can make accounting firms dare not to cheat by raising the punishment standard and increasing the legal responsibility of financial fraud. Strengthening the analysis of big data of financial supervision and cracking down on financial fraud can prevent accounting firms from counterfeiting. We should strictly supervise the accounting firms and listed companies, and investigate the audit responsibility and accounting responsibility of financial fraud in accordance with the law for a long time, so that the accounting firms do not want to cheat.

It is worth mentioning that, according to the arrangement of the opinions, in the future, we will also focus on reasonably distinguishing the accounting responsibility of enterprises for financial fraud and the audit responsibility of accounting firms, and clarify the legal responsibility of other units to issue false certificates to certified public accountants.

"At present, our operation means is to leave marks throughout the whole process, record every link, and use e-mail as a chat tool, which is conducive to the preservation of evidence." Some registered accountants in Shanghai told the reporter of the 21st century economic report.

Chen Li, chief economist of Sichuan financial securities and director of the Research Institute, also believes that under the registration system, although more stringent requirements are put forward for intermediary agencies and the responsibilities of intermediary agencies are strengthened, it is not "throwing the pot" to intermediaries when financial problems arise. Therefore, it is necessary to clarify the responsibility boundary of intermediary agencies, so as to promote the quality of financial information more effectively.

In addition to strengthening the strict supervision of domestic listed companies and practicing accounting firms, for the increasingly open capital market, the opinion also proposes to carry out cross-border cooperation in accounting and auditing supervision in accordance with laws and regulations, safeguard national economic information security and the legitimate rights and interests of enterprises, and enhance international credibility and influence.

In March this year, the U.S. Securities and Exchange Commission formally passed the final amendment to the foreign company Accountability Act, which specifies that if a foreign issuer fails to meet the inspection requirements of the public company accounting oversight board on accounting firms for three consecutive years, its securities will be prohibited from trading in the United States.

In this regard, Chen Li believes that it is urgent to carry out cross-border cooperation in accounting and auditing supervision, and the introduction of the Opinions also shows that China is willing to make appropriate communication and correction according to the accounting standards of the listed countries for enterprises to go overseas for listing.

Form a quality oriented selection mechanism

While strengthening the supervision of CPA industry, the opinion also hopes to reverse the current evaluation mechanism in the industry and promote the construction of quality-oriented selection and appointment mechanism of accounting firms.

It is proposed that we should strengthen the guidance and supervision of the enterprise internal audit work, mobilize the internal audit and social audit strength, and enhance the audit supervision joint force. We should improve the relevant regulations on the selection and appointment of accounting firms by state-owned enterprises and listed companies, compact the responsibility of the enterprise audit committee, scientifically set the index weight of the selection and appointment of accounting firms, improve the weight of quality factors, reduce the weight of price factors, improve the evaluation method of quotation factors, guide the formation of a quality-oriented selection and appointment mechanism, and effectively curb vicious competition from the source. Strengthen the supervision of the implementation of the relevant provisions on the selection and appointment, and seriously pursue the responsibility of the enterprises that violate the regulations and the accounting firms with price competition and make an announcement.

In May this year, the Sichuan Institute of Certified Public Accountants interviewed 21 accounting firms, suggesting that they should participate in the SASAC audit project with reasonable fees, and require the accounting firms to standardize their bidding behavior and resist low price competition. Specifically, most accounting firms in the relevant audit projects won the bid with a price limit of about 50%. Sichuan Zhongli accounting firm took the lowest price in the bidding process. Among them, only 132000 audit fees were charged for a single project, which was 47.14% lower than the bidding price limit.

Earlier, in April this year, the Beijing Institute of certified public accountants also issued regulatory risk warning letters to nine accounting firms, mainly focusing on the problem that some accounting firms "undertake too much business and obviously do not match the human resources of the accounting firms".

A domestic certified public accountant told the reporter of the 21st century economic report that the audit fees of domestic accounting firms have been on a downward trend in recent years. From 2011 to 2012, affected by the domestic anti-corruption situation, many state-owned enterprises changed their audit institutions from the "big four" in the industry to the "eight" clubs in China, namely Tianzhi international, Tianjian, Lixin, zhongruiyuehua, xinyongzhong, Daxin To Tong and Dahua“ Audit fees directly fell by more than half, and the big four began to fight a price war to retain customers, further affecting the industry pattern. "

"In order to retain customers, price war is really a relatively reliable choice." Another domestic certified public accountant said that in recent years, the number of employees in the industry has increased greatly. The CPA is no longer a scarce resource, and the overall wage level has also declined. This is also the reason why various clubs can accept the price war to a certain extent.

The relevant person in charge of the Ministry of finance also said that it is working with SASAC and CSRC to speed up the research, formulation and improvement of relevant regulations on the selection and appointment of accounting firms by state-owned enterprises and listed companies. Through scientific setting of index weights for the selection and appointment of accounting firms, the weight of quality factors is improved, the weight of price factors is reduced, and the evaluation method of price factors is improved, Guide the formation of a quality-oriented selection mechanism.

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