Accounting Law of the People’s Republic of China
(Amended on 10/31/1999)
(Adopted at the Ninth Meeting of the Standing Committee of the Sixth National People’s Congress on January 21, 1985 and revised in accordance with the Decision on Amending the Accounting Law of the People’s Republic of China adopted at the Fifth Meeting of the Standing Committee of the Eighth National People’s Congress on December 29, 1993, and revised at the 12th Meeting of the Standing Committee of the Ninth National People’s Congress on October 31, 1999)
Contents
- Chapter I General Provisions
- Chapter II Accounting Practice
- Chapter III Special Provisions on Accounting Practice of Companies and Enterprises
- Chapter IV Accounting Supervision
- Chapter V Accounting offices and Accounting Personnel
- Chapter VI Legal Liability
- Chapter VII Supplementary Provisions
Chapter I General Provisions
Article 1 This Law is enacted for the purposes of standardizing accounting behavior, ensuring the authenticity and completeness of accounting documents, strengthening economic management and financial management, improving economic effects and safeguarding the order of socialist market economy.
Article 2 State organs, associations, companies, enterprises, institutions and other organizations (hereinafter uniformly referred to as units) must, in handling accounting affairs, abide by this Law.
Article 3 Every unit must set up account books in accordance with law and ensure that they are authentic and complete.
Article 4 The person in charge of a unit shall be responsible for the authenticity and completeness of the accounting work and accounting documents of his own unit
Article 5 Accounting offices and accounting personnel shall conduct accounting practice and exercise accounting supervision in accordance with this Law.
No unit or individual may, by any means, incite, instigate or forcibly order accounting offices or accounting personnel to forge or alter accounting vouchers, account books and other accounting documents or submit false financial and accounting reports.
No unit or individual may be allowed to persecute or retaliate against the accounting personnel who perform their functions and duties in accordance with law and oppose the acts in violation of this Law.
Article 6 The accounting personnel who make notable achievements in earnestly implementing this Law, devoting themselves to their duties and adhering to principles are to be given spiritual or material awards.
Article 7 The financial department of the State Council takes charge of the accounting work throughout the country.
The financial departments of the local people’s governments at or above the county level administer the accounting work of their respective administrative areas.
Article 8 The State shall exercise a uniform accounting system. The uniform accounting system of the State shall be formulated and promulgated by the financial department of the State Council in accordance with this Law.
Relevant departments of the State Council may, in accordance with this law and the uniform accounting system of the State, formulate specific measures or supplementary provisions for the implementation of the uniform accounting system of the State applied in the sectors which have specific requirements for accounting practice and accounting supervision, and submit them to the financial department of the State Council for examination and approval.
The General Logistics Department of the Chinese People’s liberation Army may, in accordance with this Law and the uniform accounting system of the State, formulate specific measures for the implementation in the Army of the uniform accounting system of the State, and submit them to the financial department of the State Council for the record.
Chapter II Accounting Practice
Article 9 Every unit must, according to the economic transaction and operational matters which actually occur, conduct accounting, draw up accounting documents, enter account books and prepare financial and accounting reports.
No unit may conduct accounting with false economic transaction and operational matters or data.
Article 10 Accounting procedures shall be undertaken and accounting practice conducted with respect to the following economic transaction and operational matters:
(1) receipts and disbursement of cash holdings and valuable securities;
(2) receipts, issuance, additions, reductions and use of money and articles of properties;
(3) creation and settlement of debts and claims;
(4) increases and decreases of capital and funds;
(5) computation of revenue, expenditures, expenses and costs;
(6) computation and arrangement of financial results;
(7) other matters that are subject to accounting procedures and accounting practice.
Article 11 A fiscal year starts on January 1 and ends on December 31 of the Gregorian calendar.
Article 12 Renminbi is used as the base currency for bookkeeping in accounting practice.
The units whose receipts and expenditures are conducted chiefly in currencies other than Renminbi may select one of them as the base currency for bookkeeping, but the financial and accounting reports prepared shall be reflected in Renminbi converted from the foreign currency.
Article 13 Accounting vouchers, account books, financial and accounting reports and other accounting documents must conform to the provisions of the uniform accounting system of the state.
Where the accounting practice is conducted with computers, the software thereof and the accounting vouchers, account books, financial and accounting reports and other accounting documents produced therefrom, must also conform to the provisions of the uniform accounting system of the State.
No unit or individual may forge or alter accounting vouchers, account books and other accounting documents, nor submit false financial and accounting reports.
Article 14 Accounting vouchers shall include original vouchers and recording vouchers.
In handling the economic transaction and operational matters stipulated in Article 10 of this Law, original vouchers must be drawn up or obtained, and then promptly filed with the accounting offices.
Accounting offices and accounting personnel must examine the original vouchers in accordance with the uniform accounting system of the State, have power to refuse inauthentic or illegal original vouchers and make reports to the person in charge of the units; return the inaccurate or incomplete original vouchers and require to make corrections or supplements in accordance with the provisions of the uniform accounting system of the State.
The items entered into original vouchers may not be altered; where there are errors in the original vouchers, the drawing units shall draw up new vouchers or make corrections, the seals of drawing units shall be stamped in the place of corrections. Where there are errors with respect to amount, the drawing units shall draw up new vouchers, and may not make any corrections on the original vouchers.
Recording vouchers shall be prepared on the basis of the examined original vouchers and other related materials.
Article 15 Account book entries must be conducted on the basis of the examined accounting vouchers and conform to the provisions of relevant laws, administrative regulations and the uniform accounting system of the State. Account books include general ledgers, detail ledgers, daily books and other auxiliary account books.
Account books shall be entered in accordance with the order of pages consecutively numbered. Where there are errors or page partition, number shortage or line skip, corrections shall be made in accordance with the methods stipulated in the uniform accounting system of the State, and sealed by the accounting personnel, the person in charge of the accounting office (the accountant in charge) in the place of corrections.
Where accounting practice is conducted with computers, entries and corrections of account books thereof shall be in conformity with the provisions of the uniform accounting system of the State.
Article 16 The economic transaction and operational matters conducted by every unit shall be entered and calculated uniformly in the account books set up according to law and may not be entered or calculated in the account books set up secretly in violation of the provisions of this Law and the uniform accounting system of the State.
Article 17 Every unit shall regularly check the accounting records with physical assets, cash holdings and relevant information and ensure that accounting records conform to the actual amount of the physical assets and cash holdings, accounting records conform to the relevant contents of the accounting vouchers, accounting records conform to one another and accounting records conform to the relevant contents of the accounting statements.
Article 18 Accounting arrangement methods adopted by every unit shall remain consistent from one period to another and may not be arbitrarily changed. Where changes are absolutely necessary, the changes shall be made in accordance with the provisions of the uniform accounting system of the State, and the reasons circumstances and effects of the changes shall be explained in the financial and accounting reports.
Article 19 Probable matters such as guaranty provided by the units or pending lawsuit of the units, etc. shall be explained in the financial and accounting reports in accordance with the provisions of the uniform accounting system of the State.
Article 20 Financial and accounting reports shall be prepared on the basis of the examined accounting book records and relevant documents. They must be in conformity with the provisions of this Law and the uniform accounting system of the State on matters relating to the requirements for the preparation thereof, to whom they are required to be submitted, and the time limit within which they must be submitted to. Where other laws or administrative regulations stipulated otherwise, such provisions shall be applied.
Financial and accounting reports are composed of accounting statements, the affiliated notes to the accounting statements and the explanatory statements on financial conditions. The basis for the preparation of financial documents and accounting reports provided for different users of accounting shall be consistent. Where the relevant laws or administrative regulations stipulate that the accounting statements, the affiliated notes thereto and the explanatory statements on financial conditions are subject to audit by certified public accountants, the auditing reports issued by the certified public accountants and the accounting firms which the certified public accountants belong to shall be submitted together with the financial and accounting reports.
Article 21 Financial and accounting reports shall be signed and sealed by the person in charge of the unit, the person in charge of accounting work, and the person in charge of the accounting office(accountant in charge).
For a unit having an accountant-general, the accountant-general shall also sign and seal the financial and accounting reports.
The person in charge of the unit shall ensure the authenticity and the completeness of the financial and accounting reports.
Article 22 The language used in accounting records shall be Chinese. In an autonomous area of minority nationalities, one minority language commonly used in the locality may be used concurrently with the Chinese language in the accounting records. The accounting records of foreign-invested enterprises, foreign enterprises and other foreign organizations within the territory of the People’s Republic of China may also use one foreign language concurrently.
Article 23 Every unit shall establish archives for accounting vouchers, account books, financial and accounting reports and other accounting documents, and properly keep them. The time limit for keeping the accounting archives and the procedures for their destruction shall be formulated by the financial department of the State Council jointly with relevant departments.
Chapter III Special Provisions on the Accounting Practice of Companies and Enterprises
Article 24 The accounting practice of a company or an enterprise shall be in conformity with the provisions of this Chapter, in addition to the provisions of Chapter II of this Law.
Article 25 Companies and enterprises must confirm, calculate and record assets, debts, owners’ equities, revenues, expenses, costs, and profits in accordance with the provisions of the uniform accounting system ?of the State on the basis of the economic transaction and operational matters which actually occur.
Article 26 In handling accounting practice, companies and enterprises may not conduct the following acts:
(1) arbitrarily changing the criteria for the confirmation of assets, debts and owners’ equities or changing methods of their calculation, fraudulently listing the assets, debts or owners’ equities, listing more or less than their actual amounts, or omitting such items;
(2) fraudulently listing or concealing revenues, delaying to confirm revenues or confirming revenues in advance;
(3) arbitrarily changing the criteria for the confirmation of expenses or costs, or changing the methods of their calculation, listing the expenses and costs fraudulently, listing more or less than the actual amounts of expenses or costs, or omitting such items;
(4) making arbitrary adjustment on the methods of calculation or distribution of profits, fabricating false profits or concealing profits;
(5) other acts violating the provisions of the uniform accounting system of the State.
Chapter IV Accounting Supervision
Article 27 Every unit shall set up and improve its internal accounting supervision system. The internal accounting supervision of a unit shall meet the following requirements:
(1) The staff making accounting records, the persons responsible for approval of economic transaction and operational matters and that responsible for accounting matters, the staff handling accounting matters and the staff handling matters for the safe-keeping of properties shall all have clear, separate responsibilities, powers and functions, and they shall check mutually;
(2) The procedures for mutual supervision and mutual checks on the decision-making and its implementation on important economic transaction and operational matters, such as important external investment, the disposal of assets, the operation of funds etc., shall be explicit and clear;
(3) The scope, time limit and organizational procedures for checking of properties shall be explicit and clear;
(4) The measures and procedures for regular internal auditing of accounting documents shall be explicit and clear.
Article 28 The person in charge of a unit shall ensure that the accounting office and the accounting personnel perform their functions legally. He may not incite, instigate or forcibly order the accounting office or the accounting personnel of the unit to handle the accounting matters illegally.
The accounting offices and the accounting personnel have the right to refuse to handle it or to correct within their authorities the accounting matters in violation of the provisions of the uniform accounting system of the State.
Article 29 When accounting offices or accounting personnel find that the accounting book records are inconsistent with the physical assets, cash holdings or the relevant documents, and where they have the authorities to handle it on their own according to the provisions of the uniform accounting system of the State, they shall handle it timely. Where they do not have the authorities, they shall report immediately to the person in charge of the unit and request to make investigation on the causes and to handle it accordingly.
Article 30 Any unit or individual have the right to report on violations of the provisions of this Law or of the uniform accounting system of the State. Upon receiving such a report, the department having the power to deal with the violation shall, within their functions and duties, deal with it timely according to law. Where the department does not have such authority, it shall transfer the report to the competent departments to dispose. The department having received such report and the department responsible for dealing with it shall keep confidentiality for the reporting person and may not disclose the name of the reporting person, nor transfer the reporting material to the unit or the individual being reported.
Article 31 Where a unit is subject to audit by certified public accountant in accordance with the provisions of the relevant laws and administrative regulations, the unit shall provide truthfully accounting vouchers, account books, financial and accounting reports and other accounting documents as well as the relevant information to the delegated accounting firm.
Any unit or individual may not, by any means, ask or express implicitly their intention to the certified public accountant and the accounting firm to which the certified accountant belongs to issue false or inappropriate auditing report.
The financial departments shall have the authorities to supervise on the procedures of the preparation of and on the contents of the auditing report submitted by the accounting firm.
Article 32 The financial departments shall supervise on the following matters of every unit:
(1) Whether accounting books are set up according to law;
(2) Whether accounting vouchers, account books, financial and accounting reports and other accounting documents are authentic and complete;
(3) Whether its accounting practice is in conformity with the provisions of this Law and the uniform accounting system of the state;
(4) Whether the accounting personnel have acquired the qualification for accountant’s practice.
Where serious suspicion of violation of law is found in the process of supervision on matters listed in item (2) of the preceding paragraph, the financial department of the State Council and its agencies may inquire into the relevant facts from units that have economic transaction with the supervised unit and from financial institutions with which the supervised unit maintains accounts. Such relevant units and financial institutions shall render their assistance.
Article 33 Financial department, auditing department, tax administration, people’s bank, department for securities administration and department for insurance administration etc., shall conduct supervision and inspection on the accounting documents of the relevant units in accordance with the provisions of the relevant laws and administrative regulations on their functions and duties.
The supervision and inspection departments listed in the preceding paragraph shall provide conclusions after the supervision and inspection on the accounting documents of the relevant units have been conducted according to law. Where the conclusions made by the relevant supervision and inspection departments are sufficient to satisfy the needs of other supervision and inspection departments in performing their functions and duties, such other supervision and inspection departments shall make use ?of those conclusions so as to avoid repeated auditing .
Article 34 The departments and personnel thereof conducting supervision and inspection on the accounting documents of the relevant units according to law shall have the obligation of keeping confidentiality of the State secret and commercial secret obtained in the process of supervision and inspection.
Article 35 Every unit shall, in accordance with the provisions of the relevant laws and administrative regulations, accept supervision and inspection conducted according to law by the relevant supervision and inspection departments, provide truthfully accounting vouchers, account books, financial and accounting reports as well as other accounting documents and the relevant information. It may not refuse to provide, conceal or fraudulently report those documents and the relevant information.
Chapter V Accounting offices and Accounting Personnel
Article 36 Every unit shall, according to the needs of its accounting work, set up an accounting office, or staff a relevant office with accounting personnel and designate an accountant in charge. Where conditions do not permit, the unit shall delegate its bookkeeping to an intermediary organization which is established upon approval to engage in agency operation of accounting bookkeeping.
A Large or medium-sized enterprise owned by the State or in which the State-owned assets occupy a holding or leading position must have an accountant-general. The qualifications, appointment or removal procedures as well as functions and powers of the accountant-general are to be stipulated by the State Council.
Article 37 An accounting office shall establish an internal auditing system.
A cashier shall not be concurrently in charge of auditing, taking custody of accounting archives or entering the receipts, expenditure, expense or claims and debts accounts.
Article 38 A person who is engaged in accounting work must acquire an accountant’s practice qualification certificate.
Anyone who is to be the person in charge of the accounting office of a unit (accountant in charge) in addition to acquiring an accountant’s practice qualification certificate, shall have professional and technical title of accountant or above or have been engaged in accounting work for more than 3 years.
Measures on the administration of accounting personnel’s practice qualifications shall be stipulated by the financial department of the State Council.
Article 39 Accounting personnel shall abide by professional ethics and improve their professional qualities. The work of education and training of accounting personnel shall be enhanced.
Article 40 Persons who are investigated for criminal liabilities according to law for providing untruthful financial and accounting reports, making false accounts, concealing or intentionally destroying accounting vouchers, account books as well as financial and accounting reports, embezzlement, misappropriating public funds, taking possession of properties by taking advantages of positions or for other illegal acts relating to their accounting positions may not acquire or acquire again accountant’s practice qualification certificates.
Besides the persons as stipulated in the preceding paragraph, persons who have their accountant’s practice qualification certificates revoked for violating laws and disciplines may not acquire the accountant’s practice qualification certificates again within 5 years as of the date of the revocation of such certificates.
Article 41 Accounting personnel who are being transferred to other work or leaving their posts must finalize the handing-over procedures with the persons who are taking over.
The person in charge of the accounting office (accountant in charge) shall supervise handing-over procedures for ordinary accounting personnel. The person in charge of a unit shall supervise handing-over procedures for the person in charge of the accounting office (accountant in charge); when necessary the superior administrative unit may send personnel to participate in the supervision of the handing-over.
Chapter VI Legal Liability
Article 42 Where the provisions of this Law are violated by committing one of the following acts, the financial department of the people’s government at or above the county level shall order to make corrections within a specified time limit, may simultaneously impose a fine of not less than 3,000 yuan but not more than 50,000 yuan upon the unit, and may impose a fine of not less than 2,000 yuan but not more than 20,000 yuan upon the persons directly in charge and other persons directly responsible. The persons who are State functionaries shall also be imposed upon administrative sanctions according to law by the unit to which they belong or the unit concerned:
(1) No account books are set up according to law;
(2) Account books are set up secretly;
(3) Original vouchers are drawn up or obtained not conforming to the provisions or original vouchers drawn up or obtained are not in conformity with the provisions;
(4) Account books are recorded on the basis of accounting vouchers which are not examined and verified or account books are recorded not conforming to the provisions;
(5) The measures for accounting arrangement are arbitrarily changed;
(6) The basis for preparing financial and accounting reports provided to different users of accounting documents is inconsistent;
(7) Failure to use in accordance with the provisions the account recording language or the base currency for bookkeeping;
(8) Failure to keep in accordance with the provisions the accounting documents, and thus resulting in destruction and loss of such accounting documents;
(9) Failure to establish and implement in accordance with the provisions the internal accounting supervision system of the unit, or refusing supervision conducted according to law or untruthfully providing the relevant accounting documents as well as relevant information;
(10) The appointment of accounting personnel is not in conformity with the provisions of this Law.
Where one of the acts as stipulated in the preceding paragraph is committed and therefore a crime is constituted, criminal liabilities shall be investigated according to law.
Where accounting personnel commit one of the acts as stipulated in paragraph 1 and the circumstances are serious, the financial department of the people’s government at or above the county level shall revoke their accountant’s practice qualification certificates.
Where punishments against the acts as stipulated in paragraph 1 are otherwise provided in the relevant laws, the matter shall be handled in accordance with such provisions.
Article 43 Where accounting vouchers or account books are forged or altered, or false financial and accounting reports are prepared, and therefore an crime is constituted, criminal liability shall be investigated in accordance with law.
Where the acts as stipulated in the preceding paragraph are committed but no crime is constituted, the financial department of the people’s government at or above the county level shall circulate a notice, may simultaneously impose a fine of not less than 5,000yuan but not more than 100,000 yuan upon the unit, and may impose a fine of not less than 3,000 yuan but not more than 50,000 yuan upon the persons directly in charge and other persons directly responsible. The persons who are State functionaries shall also be imposed upon administrative sanctions according to law from removing from post up to expelling from the units by the unit to which they belong or the unit concerned; for the accounting personnel among them, the financial department of the people’s government at or above the county level shall additionally revoke their accountant’s practice qualification certificates.
Article 44 Where accounting vouchers, account books or financial and accounting reports that should be kept according to law are concealed or intentionally destroyed, and therefore a crime is constituted, criminal liability shall be investigated in accordance with law.
Where the acts as stipulated in the preceding paragraph are committed but no crime is constituted, the financial department of the people’s government at or above the county level shall circulate a notice, may simultaneously impose a fine of not less than 5,000 yuan but not more than 100,000 yuan upon the unit, and may impose a fine of not less than 3,000 yuan but not more than 50,000 yuan upon the persons directly in charge and other persons directly responsible. The persons who are State functionaries shall also be imposed upon administrative sanctions according to law from removing from post up to expelling from the units by the unit to which they belong or the unit concerned; for the accounting personnel among them, the financial department of the people’s government at or above the county level shall additionally revoke their accountant’s practice qualification certificates.
Article 45 Whoever incites, instigates or forcibly orders accounting offices, accounting personnel and other persons to forge or alter accounting vouchers or account books, to prepare false financial and accounting reports, or to conceal or intentionally destroy accounting vouchers, account books as well as financial and accounting reports that should be kept according to law, and therefore constitutes a crime, shall be investigated for criminal liability in accordance with law; a fine of not less than 5,000 yuan but not more than 50,000 yuan may be imposed if no crime is constituted, and the persons who are State functionaries shall also be imposed upon administrative sanctions of demoting to a lower rank, removing from post or expelling from the units according to law by the unit to which they belong or the unit concerned.
Article 46 Where the person in charge of a unit persecutes or retaliates against the accounting personnel, who perform their duties according to law and oppose acts violating the provisions of this Law, by means of demoting to a lower rank, removing from post, transferring working post, dismissing from employment or expelling from the units, etc., and therefore constitute a crime, criminal responsibility shall be investigated in accordance with law; if no crime is constituted, administrative sanctions shall be imposed according to law by the units to which they belong or the unit concerned. For the accounting personnel who are persecuted or retaliated against, their reputation, original positions and ranks shall be resumed.
Article 47 Functionaries in financial departments and relevant administrative departments who abuse their powers, neglect their duties, commit illegalities for personal interests or by fraudulent means, or disclose State secrets or commercial secrets, and therefore constitute crimes, shall be investigated for criminal liabilities in accordance with law; administrative sanctions shall be imposed if no crime is constituted.
Article 48 Whoever, in violation of the provisions in Article 38 of this Law, transfers the name of the reporting person and reporting materials to the unit reported and the person reported shall be imposed upon administrative sanctions according to law by the unit to which he belongs or the unit concerned.
Article 49 Where the provisions of both this Law and other laws are violated simultaneously, sanctions shall be imposed according to law by the relevant departments within their respective functions and powers.
Chapter VII Supplementary Provisions
Article 50 For the purpose of this Law, the meanings of the following terms are:
The person in charge of a unit refers to the legal representative of a unit or the person in charge stipulated by laws or administrative regulations who performs functions and powers on behalf of the unit.
The uniform accounting system of the State refers to the system concerning accounting practice, accounting supervision, accounting offices and accounting personnel as well as administration of accounting work which are formulated by the financial department of the State Council in accordance with This law.
Article 51 The specific measures governing the accounting of individual industrial and commercial business operators shall be formulated separately by the financial department of the State Council in accordance with the principles of this Law.
Article 52 This Law shall come into force as of the date of July 1, 2000.