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1、Scheme of Pilot Audit by Accounting Firms for H Share EnterprisesUpon approval by the officials of the Ministry of Finance (MOF) and the China Securities Regulatory Commission (CSRC), the Accounting Department of the MOF and the Accounting Department of the CSRC have decided to conduct the pilot wor
2、k for mainland accounting firms to audit H share enterprises according to the “Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA)”, the “Joint Declaration on the Converged China Accounting Standards for Business Enterprises and Hong Kong Financial Reporting Standards” and the “Joi
3、nt Declaration of the China Auditing Standards Board and the Hong Kong Institute of Certified Public Accountants on the Converged China Auditing Standards and Hong Kong Auditing Standards”. The following scheme of pilot work is put forward to boost Chinas CPA industry, promote the mainland accountin
4、g firms to audit H share enterprises in an orderly way, form a win-win situation with Hong Kongs accounting industry, and safeguard the interests of H share investors and the sound development of both capital markets.I. Pilot PrinciplesThe following principles shall be adhered to in the pilot work t
5、o ensure that the accounting firms participating in the pilot can conduct high-quality audit towards the H share enterprises:(1) strictly conforming to the requirements and giving top priority to quality. Accounting firms conducting audit towards H share enterprises shall accommodate themselves to t
6、he requirements for the CPA profession raised by mainland enterprises listing in Hong Kong, and shall have professional competence and social recognition.(2) selecting according to qualification and developing steadily. In the initial stage of the pilot, a small number of eligible accounting firms s
7、hall be selected to conduct audit towards H share enterprises. The scope of pilot will be expanded prudentially at a proper time according to the specific situation.(3) applying voluntarily and strengthening examination. Eligible mainland accounting firms may voluntarily apply for participating in t
8、he pilot. The MOF and the CSRC shall strengthen the examination and check on the quality to prevent the ineligible accounting firms from conducting audit for H share enterprises from the start.II. Examination and Recommendation InstitutionThe MOF and the CSRC have established the “Examination and Re
9、commendation Committee for Pilot Audit of H Share Enterprises by Mainland Accounting Firms” (hereinafter shortened as the Committee) to be in charge of the examination and recommendation of the accounting firms applying for participating in the pilot. The positions of Chairman and Vice Chairman of t
10、he Committee will be held by persons in charge of the MOF Accounting Department and the CSRC Accounting Department, respectively. Members of the Committee will be relevant persons in charge of the Accounting Department and the Supervision and Inspection Bureau of the MOF, the Accounting Department o
11、f the CSRC and the Chinese Institute of Certified Public Accountants (CICPA). The Committee will have an Office (the Accounting Department of the MOF), whose members are relevant personnel of the Accounting Department and the Supervision and Inspection Bureau of the MOF, the Accounting Department of
12、 the CSRC and the CICPA.III. Basic RequirementsThe Committee will select the accounting firms for pilot in accordance with the following basic requirements:(1) having the qualifications for securities and futures businesses; having conducted the audit of H share enterprises before or expecting that
13、it will be able to undertake the audit of H share enterprises;(2) having had an operating revenue (including that of the domestic and overseas branches; similarly hereinafter) of at least RMB300 million last year, of which not less than RMB200 million was derived from auditing and not less than RMB5
14、0 million was derived from securities-related businesses, or having conducted audit towards at least 30 listed companies;(3) having at least 400 CPAs, among which not less than 300 staff obtained the CPA qualification through exam;(4) the shareholding proportion of each (natural person) shareholder
15、or the share of properties of each partner shall not exceed 25%;(5) having established and effectively implemented sound governance structure and such systems as quality control and internal management;(6) having a member firm in Hong Kong or being under the same international accounting firm with o
16、ne Hong Kong-based accounting firm.An accounting firm that meets the aforesaid basic requirements through consolidation may apply for participating in the pilot, but it shall complete the substantive consolidation procedures before October 31, 2009. Substantive consolidation procedures include the signing of consolidation agreement, the release of consolidation announcement, the return of the qualification certificates of securities and futures businesses and (or) the accounting firm pra
