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Letter on soliciting opinions on the Notice on Strengthening the Internal Control Construction of Listed Companies and Enterprises Intended to Be Listed and Promoting Internal Control Evaluation and Audit (Draft for Comments).
Finance Council [2023] No. 23
The finance departments (bureaus) of all provinces, autonomous regions, municipalities directly under the Central Government, and cities with separate planning status, the finance bureaus of the Xinjiang Production and Construction Corps, the local supervision bureaus of the Ministry of Finance, and relevant units:
In order to thoroughly implement the spirit of the 20th National Congress of the Communist Party of China and the relevant requirements of the Opinions on Further Strengthening the Supervision of Accounting and the Opinions of the State Council on Further Improving the Quality of Listed Companies (Guo Fa [2020] No. 14) issued by the General Office of the Central Committee and the General Office of the State Council, promote listed companies and enterprises to be listed to further strengthen internal control, carry out internal control evaluation, and implement internal control audit of financial reporting, we have studied and drafted the " Notice on Strengthening the Internal Control Construction of Listed Companies and Enterprises Preparing to Be Listed and Promoting Internal Control Evaluation and Audit (Draft for Comments). It is now issued to you, please organize to solicit comments, and feedback the opinions to the Accounting Department of the Ministry of Finance before October 27, 2023, please indicate the contact person and contact information in the feedback materials.
Contact: Ministry of Finance Accounting Department System Three Division Mi Chuanjun
Contact number: 010-61965143
Email: [email protected]
Annex: 1. Notice on Strengthening the Internal Control Construction of Listed Companies and Enterprises Preparing to Be Listed and Promoting Internal Control Evaluation and Audit (Draft for Comments)
2. Drafting instructions on the Notice on Strengthening the Internal Control Construction of Listed Companies and Enterprises Intended to Be Listed and Promoting Internal Control Evaluation and Audit (Draft for Comments).
General Office of the Ministry of Finance
October 7, 2023
Notice on Strengthening the Internal Control Construction of Listed Companies and Enterprises Preparing to Be Listed and Promoting Internal Control Evaluation and Audit (Draft for Solicitation of Comments)
In order to thoroughly implement the spirit of the 20th National Congress of the Communist Party of China and the relevant requirements of the Opinions on Further Strengthening the Supervision of Accounting and Accounting and the Opinions of the State Council on Further Improving the Quality of Listed Companies (Guo Fa [2020] No. 14) issued by the General Office of the Central Committee and the General Office of the State Council, supervise listed companies and enterprises to be listed (enterprises to be listed as referred to in this notice, Including companies applying for initial public offerings and listing on the stock exchange and companies that publicly issue shares to unspecified qualified investors and are listed on the Beijing Stock Exchange) to improve internal governance and improve the level of standardized operation, the Ministry of Finance and the China Securities Regulatory Commission decided to promote listed companies and enterprises to be listed to strengthen internal control construction, carry out internal control evaluation, and implement internal control audit of financial reporting. The relevant matters are hereby notified as follows:
1. All listed companies should strictly follow the relevant requirements of the Basic Standards for Enterprise Internal Control (Cai Hui [2008] No. 7) and the supporting guidelines for enterprise internal control (hereinafter collectively referred to as the enterprise internal control standard system), continuously optimize the internal control system, improve the risk assessment mechanism, strengthen internal control evaluation and audit, scientifically identify internal control deficiencies, strengthen the rectification of internal control deficiencies, promote the continuous improvement of the company's internal control, and continuously improve the effectiveness of internal control. At present, listed companies that have not fully implemented the internal control standard system of the enterprise should carry out internal control evaluation in accordance with the requirements of the internal control standard system of the enterprise, and hire an accounting firm to audit the internal control of financial reporting.
2. Each listed company shall strictly implement the internal control normative system of the enterprise and the relevant requirements of the "Rules for the Compilation and Reporting of Information Disclosure of Companies Offering Securities to the Public No. 21 - General Provisions on Annual Internal Control Evaluation Report" (CSRC Announcement [2014] No. 1), truthfully, accurately and completely disclose the relevant information of the company's internal control, and disclose the company's annual report (hereinafter referred to as the annual report) every year. Disclose the company's internal control evaluation report approved by the board of directors and the financial report internal control audit report issued by the accounting firm. At present, companies listed on the ChiNext and Beijing Stock Exchange that have not yet carried out internal control audits in accordance with the requirements of the internal control standard system of enterprises should disclose the company's internal control evaluation report approved by the board of directors and the internal control audit report of financial report issued by the accounting firm starting from the disclosure of the company's 2024 annual report.
3. An enterprise planning to be listed should provide an unqualified internal control audit report on financial reporting issued by an accounting firm from the submission of the application materials with December 31, 2024 as the audit deadline. Enterprises to be listed that are already under review should provide the above materials when updating the 2024 annual report materials.
4. A company that has passed the listing review and is listed in the year in which this notice is issued shall, at the latest, disclose the company's internal control evaluation report approved by the board of directors and the internal control audit report of financial reports issued by the accounting firm at the same time as the annual report for the next fiscal year after listing; A company that has passed the issuance and listing review in the year following the issuance of this notice shall disclose the company's internal control evaluation report approved by the board of directors and the internal control audit report of financial reporting issued by the accounting firm at the same time as the annual report of the year of listing.
5. A listed company that is unable to disclose information related to the company's internal control within the prescribed time due to bankruptcy reorganization, reorganization and listing or major asset restructuring shall disclose the company's internal control evaluation report approved by the board of directors and the internal control audit report of the financial report issued by the accounting firm at the same time as the annual report of the next fiscal year after the completion of the relevant transaction.
6. Certified public accountants should strictly follow the requirements of relevant norms such as the Guidelines for the Audit of Internal Control of Enterprises (Annex 3 of Caifai [2010] No. 11 Document) and other relevant norms, conduct audits of the internal control of financial reporting of listed companies and enterprises to be listed, be diligent and conscientious, fully understand and master the construction and implementation of internal control over financial reporting of listed companies and enterprises to be listed, comprehensively judge the effectiveness of internal control over financial reporting of listed companies and enterprises to be listed, issue audit opinions independently, objectively and impartially, and improve the quality of internal control audit reports. At the same time, pay attention to the major deficiencies in internal control of non-financial reporting, urge listed companies and enterprises to be listed to continuously improve their internal control systems, and improve their internal governance level.
7. This Circular shall be interpreted by the Ministry of Finance and the China Securities Regulatory Commission and shall take effect on the date of promulgation.