By Dezan Shira & Associates
Editor: Jake Liddle
China’s Ministry of Finance (MOF) and the National Archives Bureau have jointly adopted a revised “Administrative Measures on Accounting Records”. In effect since the beginning of the year, the new measures are significantly different to the previous 1999 legislation and are important for all enterprises with operations in China.
The new measures have been formulated in accordance with China’s Accounting Law, Archives Law and other related laws and administrative regulations. They primarily aim to consolidate the administration of accounting records and amend regulations of record retention periods and electronic filing systems.
The new measures explain that companies may utilize information technology, such as computer and network communication, as a means of managing accounting records. Electronic accounting materials formed internally within a company, which fall under the scope of archiving, may be kept solely in electronic form if the following criteria are satisfied:
- The source of electronic accounting materials formed are true and valid, and are formed and transmitted via electronic equipment;
- The accounting system used is able to receive and read electronic accounting materials accurately, completely and effectively; able to create output of accounting materials such as accounting vouchers, account books and financial accounting statements which comply with the national standard archive format; and has set up the necessary audit and signing procedures such as handling, examination and approval;
- The electronic records management system used is able to receive, manage and utilize electronic accounting records effectively, satisfies the long-term retention requirements of electronic records, and has established the referencing relationship between the electronic accounting records and related hard copy accounting records;
- Effective measures are adopted to prevent electronic accounting records from being tampered with;
- Backup system for electronic accounting records is established for effective protection against natural disasters, accidents and vandalism; and
- The electronic accounting materials formed are not accounting records which are worthy of permanent preservation or possess significant preservation value.
Previously, all units utilizing computing for accounting purposes were required to retain all printed paper copies of account materials. Particularly, companies using tape, magnetic disk, CD, microfilm or other forms of magnetic media for saving account records needed to report to the MOF and National Archives.
The retention period of accounting records shall start on the first day following the end of the accounting year. Below is a table comparing the retention period for required accounting records of enterprises and other types of organizations according to the old and new measures:
Violation of the terms of the new measures could result in penalties imposed by the finance authorities and archive administrative authorities.
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