CSRC Releases New Rules

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Last updated at: (Beijing Time) Wednesday, December 26, 2001

CSRC Releases New Rules

New rules promulgated by CSRC

China Securities Regulatory Commission (CSRC) released new rules on December 25 to the companies which issue stocks to the public. According to the rules, the Commission will pay more attention to the certified public accountants' opinions and conduct stricter supervision over matters involved in non-standard and unreserved auditing comments.

The non-standard and unreserved auditing comments are referring to comments other than the standard and unreserved auditing ones, including explanatory unreserved auditing comments, reserved comments, inexpressible comments and negative comments. The newly-promulgated rules will standardize the behaviors of related listed companies and certified accountants in light of the non-standard and unreserved auditing comments and related matters presented by certified accountants.

More strict supervision over financial reports

Under the new rules, every listed company is required to correct the financial report if it is found to be obviously in violation of the accounting rules and has been pointed out by the certified accountant, otherwise the company will be given the non-standard and unreserved auditing comments and, after its regular report is made public, the company will be de-listed by the stock exchange. The Commission will investigate and handle the case according to law during the period of de-listing. Meanwhile, if the listed company is given inexpressible comments on its financial report, then it is not allowed to distribute profits in the year concerned.

It's said the ratio of listed companies given non-standard and unreserved comments has remained at 15-20 percent since 1997. A recent survey indicated 175 listed companies were given non-standard and unreserved comments by registered accountants in their financial reports last year, of which 56 companies' financial reports were suspected of being against present accounting rules and systems.

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by PD Online Staff Yang Ruoqian

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