Beijing to step up supervision of accountants as it fights forgery

China will sharpen its scrutiny of accounting firms in its war against financial forgery, vowing “zero tolerance” towards misconduct, it said on Monday.

The guidelines, published by China’s State Council, or cabinet, come as Beijing launches a flurry of regulatory crackdowns against sectors ranging from internet to tutoring.

China will publish detailed rules on the supervision of accounting firms, and will increase the frequency of inspections, while stepping up punishment, the guidelines said.

Meanwhile, Chinese regulators will co-operate on crossborder supervision of accounting and auditing, in a bid to safeguard China’s economic and information security.

China is stepping up efforts to open its stock and bond markets to global investors, while channelling household deposits into the country’s capital markets to help fund innovation and economic growth.

But investors’ confidence has been dented in recent years by a slew of scandals, including highprofile accounting fraud by Kangde Xin Composite Material Group Co and Kangmei Pharmaceutical.

China’s State Council said on Monday that accounting firms had not fully played their role as gatekeepers of capital markets, which have often witnessed cases of financial forgery and inaccurate accounting information.

China will also crack down on misconduct including unlicensed accounting, online hawking of auditing reports, and leakage of confidential information, according to the guidelines. The guideline did not provide specifics regarding cross-border co-operation, saying only that the move will help enhance China’s international credibility and influence.

China’s securities watchdog said on Friday it will create conditions to co-operate with the US on auditing supervision.

Washington plans to delist Chinese firms listed in the US that fail to meet its auditing requirements.

ACCOUNTING FIRMS HAVE NOT FULLY PLAYED THEIR ROLE AS GATEKEEPERS OF CAPITAL MARKETS

THE MOVE WILL HELP ENHANCE CHINA’S INTERNATIONAL CREDIBILITY AND INFLUENCE

/Reuters/File Red flag: Amid its flurry of regulatory crackdowns, the Beijing government has announced guidelines on the supervision of accounting firms as it wages a war against financial forgery. This comes against a backdrop of scandals involving high-profile accounting fraud.