Ministry of Finance Wants to Tighten Rules for Foreign Accounting Bodies Operating in China

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China’s Ministry of Finance

China’s Ministry of Finance is seeking feedback on draft regulations that tighten filing requirements for overseas accounting organizations that conduct business there without establishing domestic offices.

The draft measures, published Thursday, are intended to strengthen oversight of foreign accounting organizations by enhancing the regulatory framework outlined in 2019 guidelines which cover them. Public comments are open until Sept. 30.

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China's Ministry of Finance released draft regulations to tighten filing requirements for overseas accounting organizations without domestic offices, with public comments open until Sept. 30.
The new rules necessitate a Chinese partner for foreign accounting bodies without local offices, requiring provincial approval 15 days before activities.
Established international accounting bodies like IFRS can continue operations, but all must adhere to China's unified accounting system and use domestic auditors for financial reports.

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Who’s Who

International Financial Reporting Standards Foundation: The International Financial Reporting Standards (IFRS) Foundation is an international accounting organization that has long-term operations in China. It conducts activities such as recruiting members, training, examinations, and academic research. Under new draft regulations by China’s Ministry of Finance, such organizations without domestic offices must collaborate with a Chinese partner and obtain approval from local public security authorities and financial departments before conducting their activities.

Association of Chartered Certified Accountants: The Association of Chartered Certified Accountants (ACCA) is a major international accounting organization with long-term operations in China. They are involved in recruiting members, conducting training, examinations, and academic research. Under the new draft regulations by China’s Ministry of Finance, foreign organizations like ACCA without domestic offices must partner with Chinese entities to operate in the country, with required pre-approval from provincial authorities.

CPA Australia: CPA Australia is one of the major international accounting organizations with long-term operations in China. It recruits members, conducts training, examinations, and academic research. Under new draft regulations, CPA Australia must comply with oversight requirements and partner with a Chinese body to conduct activities without a domestic office, seeking approval from provincial authorities 15 days prior.

American Institute of Management Accountants: The American Institute of Management Accountants (IMA) is one of the leading international accounting bodies with representative offices in China approved by the Ministry of Finance. The draft regulations require foreign accounting organizations operating without domestic offices to have a Chinese partner and seek provincial approval. Organizations with established offices, like IMA, must comply with China’s unified accounting system and have their financial reports audited by domestic firms.

Hong Kong Institute of Certified Public Accountants: The Hong Kong Institute of Certified Public Accountants (HKICPA) has received approval from China's Ministry of Finance to establish a representative office in the country. Under new draft regulations, foreign accounting organizations like HKICPA with offices in China must comply with the country's unified accounting system and have their financial reports audited by domestic firms.

Institute of Chartered Accountants in England and Wales: The Institute of Chartered Accountants in England and Wales (ICAEW) is a leading international accounting body with an approved representative office in China. It operates under China's unified accounting system and its financial reports are audited by domestic firms. The ICAEW engages in activities like organizing examinations, training, and academic collaborations, often partnering with Chinese universities to provide accountancy training for students.

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What Happened When

2019：: China's Ministry of Finance outlined the regulatory framework for foreign accounting organizations.

Recent years：: The Ministry of Finance approved the setting up of representative offices for several leading international accounting bodies, including IMA, HKICPA, and ICAEW.

Before the activities take place：: Chinese partner must seek approval from provincial public security authorities and financial departments 15 days before the activities take place.

Thursday：: The Ministry of Finance published draft measures to tighten filing requirements for overseas accounting organizations without domestic offices.