China Releases Comprehensive Measures for Evaluating Accounting Firms

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Jun. 12 – The “Measures for the Overall Evaluation of Accounting Firms (Amended) (huixie [2012] No. 132, hereinafter referred to as the ‘Measures’)” have been published by the Chinese Institute of Certified Public Accountants (CICPA) on May 25, 2012. The Measures came into effect on June 1, 2012. The evaluation takes place annually and the information on the first 100 firms is publicized before the end of June each year. Only approved and certified CPA firms can participate in the evaluation.

Evaluation index:

  1. Business Revenue Index: refers to the business revenue from both the CPA firm and its practice institutions
  2. CPA Personnel Number Index: refers to the number of certified public accountants as of December 31 of the previous year
  3. Penalty Index: refers to the penalty record of both the CPA firm and its certified public accountants
  4. Overall Quality Index: refers to all other indicators

The overall evaluation score is calculated as follows:

Overall evaluation score = Business Revenue Index score + CPA Personnel Number Index score + Overall Quality Index score – Penalty Index score

The penalty index score takes into account circumstances where the firm is subject to business suspension, issuance of warning, confiscation of illegal income, issuance of public condemnation, or where CPAs are subject to the revocation of licenses or memberships.

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