The continuing and deepening economic reforms in China have brought many changes both socially and economically to the society. The primary function of auditing in China has begun to shift away from the traditional tax compliance assessment towards the credibility lending to financial statements.
Beginning at January 1 2011, the standards will take effect for audits of financial statements for periods beginning on the new Chinese auditing standards are, in a number of important aspects, similar to the professional standards promulgated by the International Federation of Accountants. The Chinese Auditing Standards Board has adopted financial auditing standards that are in full convergence with the clarified international auditing standards promulgated by the IAASB.
Article 1
To regulate and guide the auditing organs and auditors in the handling of auditing affairs, guarantee the quality of the audit work, prevent audit risks and give play to the role of audit as an “immune system” in securing the healthy economic and social development of the state, these Standards are formulated pursuant to the Audit Law of the People's Republic of China, the Regulation on the Implementation of the Audit Law of the People's Republic of China and other relevant laws and regulation.
Article 2
These Standards are the code of conduct for auditing organs and auditors to perform the statutory auditing duties, professional standards for handling the auditing affairs, and basic yardstick for assessing audit quality.
Article 3
Articles containing “shall” “may not” or “prohibited” in these Standards are mandatory provisions which constitute the professional requirements that auditing organs and auditors must abide by in the process of handling auditing affairs.
Articles containing “can” or “may” in these Standards are permissive provisions which represent the desirable audit practices.
Article 4
Auditing organs and auditors shall be governed by these Standards in the process of handling auditing affairs. Other organizations or persons commissioned or hired by auditing organs to organize or participate in audit activities shall also be governed by these Standards.
Article 5
In the process of auditing, auditing organs and auditors shall distinguish the responsibilities of auditee entities and auditing organs.
The responsibility of auditee entities lies in performing the statutory duties, abiding by the relevant laws and regulations, establishing and executing internal controls, making financial statements according to the relevant accounting standards and rules and maintaining the authenticity and integrity of financial information in government revenues and expenditures, financial revenues and expenditures and the relevant economic activities.
The responsibility of auditing organs lies in auditing the government revenues and expenditures, financial revenues and expenditures and the relevant economic activities of auditee entities and reaching audit conclusions independently pursuant to laws, regulations and these Standards.
Article 6
The main purpose of auditing organs is to maintain the national economic security, enhance democracy and rule of law, facilitate the building of an honest and clean government and guarantee the healthy development of national economy and society by means of overseeing the authenticity, lawfulness and efficiency of the government revenues and expenditures, financial revenues and expenditures and the relevant economic activities of auditee entities.
Authenticity refers to the consistency between information about government revenues and expenditures, financial revenues and expenditures and the relevant economic activities and the actual situations.
Lawfulness refers to the abidance of laws, regulations or rules in government revenues and expenditures, financial revenues and expenditures and the relevant economic activities.
Efficiency refers to the economic, social and environmental benefits achieved in government revenues and expenditures, financial revenues and expenditures and the relevant economic activities.
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