Regulation of Statutory Audit in China

Abstract

In China, following the growing number of scandals in recent decades, the statutory auditor's role and tasks have been questioned. This paper deals with the evolution of statutory audit in China, which aims to define high standards of auditing in order to protect the public interest. In this article, we discuss the current conditions for statutory audit in China to clarify who may be recognized as a qualified professional, specify the scope of relationships with clients and determine the manner in which professional discipline is maintained. Furthermore, we clarify the content of the statutory audit mission in China as defined by new standards of auditing. Where meaningful, we contrast the Chinese audit system with systems in industrialized countries, such as France and the United Kingdom, and note significant differences between China and those countries in a legal framework and professional standards. Although the context of the globalization of financial markets means ongoing reforms tend to bring statutory audit systems closer, specific features yet remain to be characterized.