Laws of the People's Republic of China

REGULATIONS FOR THE CONTROL OF THE ACCOUNTING OF
FOREIGN RELATED ENTERPRISES IN SPECIAL ECONOMIC
ZONES IN GUANGDONG PROVINCE

(Approved December 25, 1985 by the 17th Session of the Standing
Committee of the 6th Guangdong Provincial People's
Congress and promulgated February 14, 1986 by the
Guangdong Provincial People'sGovernment)

SUBJECT: ACCOUNTACY; FINANCE; SPECIAL ECONOMIC ZONES; SHANDONG

ISSUING-DEPT: GUANGDONG PROVINCE

ISSUE-DATE: 02/14/1986

IMPLEMENT-DATE: 03/01/1986

LENGTH: 1835 words

TEXT:

[Article 1] These Regulations are formulated in order to strengthen control of accounting of foreign related enterprises in Special Economic Zones in Guangdong Province (hereinafter referred to as SEZs), and to promote the establishment of SEZs, in accordance with the Law of the People's Republic of China on Accounting, the Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment, the Regulations on Special Economic Zones in Guangdong Province and other relevant laws and regulations.

[Article 2] These Regulations are applicable to Sino-foreign joint equity ventures, Sino-foreign co-operative enterprises, wholly foreign owned enterprises, and Sino-foreign limited stock companies, in SEZs (hereinafter generally referred to as foreign related enterprises in SEZs).

[Article 3] Accounting in foreign related enterprises in SEZs must comply with the laws and regulations of the People's Republic of China, and must carry out the relevant accounting procedures promulgated by the Ministry of Finance of the People's Republic of China (hereinafter referred to as the Ministry of Finance).

The State laws give protection to accounting personnel in the legitimate exercising of their rights and duties.

[Article 4] General managers of foreign related enterprises in SEZs (hereinafter managers or executive directors of boards of directors shall be the same) bear full responsibility for accounting in their enterprises.

[Article 5] Foreign related enterprises in SEZs shall, in accordance with the relevant accounting procedures of the Ministry of Finance, and in light of specific conditions in the enterprises, formulate accounting procedures for their enterprises, and shall submit them for the record to the finance bureau and tax authority of the municipality in which the SEZ is located.

Accounting procedures of foreign related enterprises in SEZs shall include the following principal elements:

(1) Work regulations;

(2) Classification and procedures and methodology for handling systems of accounts;

(3) Checking procedures;

(4) Compilation, examination and approval of accounting statements;

(5) Supervision and auditing;

(6) Records management;

(7) Rights and duties of accounting personnel;

(8) Other regulations relating to accounting matters.

[Article 6] Accounting in foreign related enterprises in SEZs shall be controlled by the finance bureau of the municipality wherein the SEZ is located.

[Article 7] Foreign related enterprises in SEZs must establish accounting offices and provide accounting personnel within the SEZs, and practise independent accounting.

All accounting records such as vouchers, accounting books, and accounting statements of foreign related enterprises in SEZs must be properly kept within the SEZ.

[Article 8] The main duties of accounting offices and accounting personnel of foreign related enterprises in SEZs are:

(1) Devising and carrying out financial budgets and financial plans;

(2) Administering accounting matters, and carrying out financial accounting;

(3) Carrying out financal and economic procedures, and exercising accounting supervision;

(4) Analysing and investigating the financial situation, and examining the effectiveness of use of funds;

(5) Participating in the drafting of all production management plans;

(6) Keeping vouchers, accounting books, accounting statements and other records.

Cash handling personnel may not take charge of auditing or accounting records storage concurrently with the work of recording income, expenditure, or creditors' and debtors' accounts.

[Article 9] Foreign related enterprises in SEZs shall establish the position of a chief accountant. In small enterprises an accountant or an officer in charge of accounting may be appointed by the board of directors to exercise the rights and duties of a chief accountant.

The chief accountant shall assist the general manager in taking responsibility for leadership of the enterprise's financial accounting.

An accountant shall be appointed by the board of directors to carry out the duties of chief accountant.

[Article 10] Foreign related enterprises in SEZs shall establish the position of an auditor. In smaller enterprises the position need not be established.

The auditor shall be responsible for examining and auditing all financial receipts and expenditures, accounting books, vouchers, accounting statements and related materials.

The auditor shall be appointed by the board of directors.

[Article 11] Accounting, accounting classifications and statements, vouchers and books, accounting records, dissolutions and liquidations of Sino-foreign joint equity ventures in SEZs shall all be handled in accordance with the provisions of the Accounting Regulations of the People's Republic of China for Joint Ventures Using Chinese and Foreign Investment.

Accounting, accounting classifications and statements, vouchers and books, accounting records, dissolutions and liquidations of Sino-foreign co- operative ventures, wholly foreign owned enterprises and Sino-foreign limited stock companies shall all be handled with reference to the provisions of the Accounting Regulations of the People's Republic of China for Joint Ventures Using Chinese and Foreign Investment. In cases where other Ministry of Finance regulations exist, those regulations shall be followed.

[Article 12] Foreign related enterprises in Special Zones must accept supervision and examination of accounting books by the finance bureau and tax authority of the municipality wherein the SEZ is located, and must furnish them with factual vouchers, accounting books and other accounting materials, and may not refuse or conceal information, or give false information. Auditing expenses shall be borne by the auditing unit.

Each participant of Joint Ventures Using Chinese and Foreign Investment, and Sino-foreign co-operative ventures, may audit the accounts of the enterprise, the expenses thereof being borne by the participant making the audit. Any problem noted in the audit that needs to be resolved by the enterprise shall be submitted promptly to the enterprise for investigation and resolution.

Auditing personnel shall be responsible for maintaining confidentiality of the accounts of the enterprise.

[Article 13] Foreign related enterprises in SEZs shall appoint accounts registered in China to audit their annual accounting statements and accounting books of the year, and auditors' reports shall be issued by them. Auditors' reports issued by accountants shall be submitted at the time annual accounting statements are submitted.

[Article 14] Accounting offices and accounting personnel of foreign related enterprises in SEZs shall not handle receipts and expenditures which contravene the financial regulations of the State and the enterprises themselves. If the general manager or board of directors insist upon handling them, the accounting offices and accounting personnel shall, at the time it is being carried out, submit written reports to its superior competent authorities regulatory departments, or submit a written report to the Finance Bureau requesting them to handle the matter; they shall also bear any responsibility if these are not reported.

[Article 15] Contraventions by foreign related enterprises in SEZs of Article 7, 11, 12, or 13 of these Regulations shall be ordered to be rectified within a limited time by the finance bureau of the municipality wherein the SEZ is located, and depending on the circumstances a fine greater than 100 yuan and less than 1,000 yuan may be imposed; if they remain unrectified at the end of the time limit the enterprises shall be ordered to close business by the Municipal Administration for Industry and Commerce of the municipality in which the SEZ is located.

[Article 16] All levels of managerial personnel, accounting personnel and other personnel of foreign related enterprises in SEZs who falsify, alter or intentionally destroy accounting documents and accounting books shall be given administrative penalties by the enterprise. In serious cases the persons responsible shall be ordered by the tax authority to compensate for the State's economic losses, and a fine shall be imposed on them not exceeding 10,000 yuan; where there are violations of criminal law, investigation of criminal responsibility according to law shall be made by the judiciary.

[Article 17] Accounting personnel of foreign related enterprises in SEZs who handle original vouchers which they clearly know are not genuine or are illegal, or receipts and expenditures which they know to be in contravention of the financial regulations of the State or of their own enterprise shall be ordered by the enterprise to rectify this, or shall be given administrative penalties; they shall be responsible for compensating economic losses caused to the enterprise. However if the General Manager or Board of Directors insist on handling them, legal responsibility shall be assumed by the General Manager and Board of Directors.

[Article 18] No unit or individual may find an excuse to dismiss, lay off early or take other forms of retaliatory action against accounting personnel who are carrying out their duties. Where retaliatory action is taken against accounting personnel who are carrying out their duties, the Board of Directors or enterprise regulatory department shall impose administrative penalties on the persons directly responsible and order them to compensate economic and other losses of the accounting personnel; where there are violations of criminal law, investigation of criminal responsibility according to law shall be made by the judiciary.

[Article 19] Parties who do not accept administrative penalties determined on the basis of these Regulations may, within fifteen days after receiving notification of the penalty, request reconsideration from the organisation at the next higher level of the department enforcing the penalty, or may bring a suit in the People's Court. If the time limit is exceeded and no request for reconsideration has been made and no suit has been brought, and the penalty that has been determined has not been carried out, an application shall be made by the department enforcing the penalty to the People's Court to enforce it.

[Article 20] All penalty charges collected in accordance with these Regulations shall be remitted to the finance bureau of the municipality in which the SEZ is located.

[Article 21] These Regulations are applicable to accounting control of enterprises in SEZs invested in and run by economic organisations of individual overseas Chinese, compatriots from Hong Kong and Macao and compatriots from Taiwan, or their economic organisations.

[Article 22] These Regulations shall come into force on March 1, 1986.