China’s leadership has set new rules to strengthen supervision of accounting firms in a fight against financial forgery, vowing “zero tolerance” toward misconduct.
China’ State Council said accounting firms have not fully played their role as “gatekeepers” of capital markets, which have often witnessed cases of financial forgery and inaccurate accounting information.
The authorities will increase the frequency of inspections on accounting firms in the securities industry and stepping up punishment over financial fraud.
It will fight against misconduct, including unlicensed accounting, online hawking of auditing reports, and leakage of confidential information, according to the guidelines.
Chinese regulators will also co-operate on cross-border supervision of accounting and auditing in a bid to safeguard China’s economic and information security.
Despite efforts to open its stock and bond markets to global investors, China has seen a slew of scandals in recent years, including high-profile accounting fraud by Kangde Xin Composite Material Group Co and Kangmei Pharmaceutical.
China Securities Regulatory Commission said last week it will “create conditions” to cooperate with its US counterpart over the supervision of the auditing of Chinese companies. The US plans to delist Chinese firms from its stock markets that fail to meet its auditing requirements.
The guidelines come as Beijing’s regulatory crackdowns against sectors ranging from technology to private education.
Last week, China’s market regulator published a set of draft regulations banning unfair competition and restricting the use of user data.
Meanwhile, China’s cabinet also announced it will implement regulations on protecting critical information infrastructure next month.