Annual Audit Requirement of WOFE

Foreign Investment Enterprise - Auditing: It means the an audit organization that is entrusted or by law to conduct auditing to those foreign-owned enterprise in China. Generally, it is in terms of financial auditing or audit of financial statements.

A) Foreign investment enterprise audits in three ways: -

  • 1. In China, the audit authority organization acts in accordance with the country's foreign policy, regulates and governs institutional audit in compliance with the relevant rules and regulations, the audit work can also be commissioned by ordinary audit organizations;
  • 2. The tax authorities acts in accordance with the law, foreign tax returns and other tax issues, tax audit, the audit work as commissioned by the national audit institutions or private auditing organization;
  • 3. Foreign investment enterprise nominates (appoints) certified public account, audit firm or other ordinary organizations, reviewing and auditing  its financial statements, issuing the audit report to the enterprise and to its investors and the public.

B) Foreign-invested enterprises - Audit Materials:

  • (1) Ledger, subsidiary ledgers (cost breakdown analysis for at least two level with cumulative figures), cash accounts, bank deposit account, billing with certificate ;
  • (2)  Annual account balance sheet ;
  • (3)  Import-Export verification form, out of storage, inventory, fixed assets inventory list ;
  • (4)  Accounting statements (including balance sheet, income statement, cash flow statement) ;
  • (5)  Bank statements for all accounts, bank reconciliation ;
  • (6)   Account opening permit ;
  • (7)  Cash inventory list ;
  • (8)  Organization code certificate ;
  • (9)  Copy of business license ;
  • (10)Tax registration certificate, registration certificate finance, foreign exchange registration certificate, foreign debt registration certificate ;
  • (11) Foreign investment approval certificate and letter ;
  • (12) Previous year's audit report ;
  • (13) Articles of Association ;
  • (14) Tax relief approved, high-tech enterprise certificate, software companies Confirmation ;
  • (15) Reconciliation of physical inventory and the current payment record book etc ;
  • (16) Foreign exchange income and expenditure statement.

C)  Foreign-invested enterprises - Annual Review and audit:

Foreign-invested enterprises are required to participate in industrial and commercial inspection, foreign exchange inspection, financial inspection, in accordance with the requirements of higher level authorities.  Foreign-invested enterprises may use both the online reporting and the written materials submission for annual reporting.

1. Foreign-invested enterprises shall submit the following documents for annual inspection:-

  • 1) To the company, its legal representative which refers to the designated representative by the power of attorney or agent, its  identity proof (identify card, working unit proof or agency enterprise, business license copies) ;
  • 2) "Foreign-invested enterprises, Taiwan, Hong Kong or Macau - invested enterprises joint annual audit report" ;
  • 3) Original business license, and a copy ;
  • 4) A full financial year (including a financial year) or more, the foreign-invested enterprises should submit by the accounting firm and issued audit report, of which it contains the annual balance sheet and income statement ;
  • 5) A verification report (only for those paid in the year 's foreign-invested enterprises contributed should be submitted) ;
  • 6) The business scope of foreign-invested enterprises that involved within the laws and regulations that is required, to submit the original license for specific projects and a copy which in consistent with the original one (and marked by seal of the enterprise, with the words "consistent with the original ") ;
  • 7) other information as if required to be submitted.

2. Foreign exchange management department - Inspection:

To further simplify the procedures for foreign-invested enterprises to participate inspection, to improve the efficiency of foreign exchange and data quality inspection, the State Administration of Foreign Exchange promotes : Who audits, who submit the "annual inspection”, to encourage foreign investment enterprises choose the annual audit report to be issued by the certified public accountant for submission the annual information; through registered public accounting firm, reports and annual corporate information that may temporarily provide without paper materials, no need to attend on-site inspection.