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China Company Auditing and Accounting (JV)

Updated:2018-7-3 15:42:15    Source:www.tannet-group.comViews:190

China company auditing and accounting (JV) refers to regulate the financial behavior of the company, and examine and notarize the economic activities and financial revenues and expenditures of joint ventures in line with the relevant laws and rules in China. The joint venture company needs to set up an independent financial institution, equipped with the business quality and the job responsibilities of the accounting personnel to do the financial accounting work. The following are the requirements on auditing and accounting of joint ventures.

China Joint Venture Accounting Requirements
It is vitally important that you keep up to date with all the accounting requirements for limited companies.

(1) Accounting books and records
Accounting period generally use the 1 January to 31 December calendar year as their accounting year, which is the same as the fiscal year for tax purposes. However, a company may, with permission, adopt a non-calendar year-end.

(2) Bookkeeping currency
Accounting books must be denominated in the local currency. If accounts are kept in a foreign currency due to business needs, such currency must be translated into local currency in the company's closing financial statements.

(3) Bookkeeping language
All accounting books, documents and financial statements prepared by a company should be in Chinese, but may also be written concurrently in a foreign language.

(4) Accounting basis
Business entities must follow the accrual basis of accounting in performing recognition, measurement and reporting for accounting purposes. All income realized and expenses incurred or attributable to the current period should be recognized as income or expenses in the current period regardless of when the income is received or expenses are paid.

China Joint Venture Auditing Requirements
1. Form of audit
As joint ventures are jointly owned by both Chinese and foreign parties, the property has all the characteristics of a multi-component, therefore, the audit of Chinese-foreign joint ventures can be divided into two forms:

(1) The audit of state owned property joint ventures by state organs.
(2) The enterprise hires the accountant of the accounting firm to conduct the audit.

2. Main content of audit
(1) Capital verification
To examine and notarize the authenticity, correctness, legality and compliance of capital contribution, proportion of contribution, payment term of contribution and assignment of capital contribution, etc, and issue a capital verification report.

(2) Annual accounting statement audit
To supervise and verify the annual balance sheet and profit statement of the joint venture and the authenticity, correctness, completeness and legitimacy of the items such as assets, liabilities, sales income, cost of goods sold, taxable income, profit and profit distribution, etc.

(3) Audit of liquidation accounting statements
When the joint venture is dissolved for various reasons, it must liquidate the prescribed procedures and liquidate its accounting statements, which shall be verified and certified by certified public accountants in China.

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