Audit Management in China

THE ISSUE

The audit landscape in China is such that the large multinational audit firms charge high international rates, which means that companies often turn to the huge pool of local Chinese audit firms to save on costs, although the quality of Chinese auditors’ work can be below international standards. Foreign companies who use local Chinese audit fi rms often encounter several problems:

·Communication problems with the local Chinese audit firm.

·Audit reports are too basic and lacking in details.

·Auditor for the foreign parent company finds it difficult to understand Chinese auditor’s work.

·Chinese auditor does not fully fulfi l international accounting standards and information requirements.

THE SOLUTION

Fiducia can manage the entire audit process between the client’s Chinese subsidiary and a trusted local audit partner to ensure transparency and maximum understanding between both parties, with the ultimate goal of making the Chinese auditor’s work clear and comprehendible so that the client’s main auditor can effectively audit the client’s business in China. Fiducia is experienced and able to provide the following services:

Annual audit


·Prepare and supervise the whole process.

·Check working papers.

·Submit to the authorities.

·Explain statements and reports to the client.

·Arrange the annual fi nancial audit & foreign exchange audit undertaken by the Chinese auditor in compliance with PRC GAAP.

Consolidation of accounts in accordance with Head Office’s policies


·Prepare reconciliations and columnar comparisons between PRC GAAP and e.g. US GAAP.

·Prepare schedules and supporting documents required by the overseas auditors.

·Arrange for confirmation of the documents regarding financial.
transactions between the client’s head offi ce and its subsidiary

Setting up controlling systems


·Validate the independence of the Chinese auditor under the requirements
of international accounting standards.

·Arrange for inventory observation.

·Evaluate the financial data provided by the company’s reporting system,
give regular updates on the fulfi lment of strategic plans and give early
warning in case of possible threats.

Ricky is a partner of Wong Brothers & Co., Certified Public Accountant, Hong Kong. 

He is a Canadian Chartered Accountant, and member of the Hong Kong Institute of Certified Public Accountants, and the Chartered Association of Certified Accountants, United Kingdom. 

He is in charge of the technical committee of the firm and looks after the firm’s training. 

He is well experienced in audit and tax practice, and specializes in financial due diligence, special investigation and management advisory services in Hong Kong and China.