Seminar: Annual Audit in China / Tax Compliance and Tax Clearance for your Entity in China

Yesterday, Ecovis Beijing Partner Mrs. Shi hold a seminar about the topic „Annual Audit in China / Tax Compliance and Tax Clearance for your Entity in China“ at the German Chamber of Commerce Beijing. The whole room was fully booked, so only the ones who reserved a seat early could get a deeper insight into the audit process and its goals. The audience was curious about certain aspects of the audit like e.g. its length, how to prevent fraud and the audit process itself. Mrs. Shi showed up several aspects, making clear, that the audit according to China GAAP, HGB and / or IFRS is not just a check of your financial statements but that it is a health check of your whole company. She mentioned three key points which are of high risk for fraud:

1. Procurement

2. Logistics

3. Cash management

This can for example imply choosing more expensive or low quality suppliers, based on relationships rather than economic criteria. In other cases if a company doesn’t have a working cash management system, money could be taken at the beginning of a month for individual purpose and returned back before the end of the month, so nobody will find out that the company’s cash is borrowed by its staff. There are many typical cases like the ones mentioned before, but mostly it needs in depth insight of the company’s internal processes and thus an audit is the best chance to find those problems.

For more information on our annual audit in China (compliance special edition downloadable here) and for individual consulting, please contact us at Ecovis Beijing. You might also become a member of our LinkedIn Group FocusChina to find others who have similar issues and to stay updated on current legal and tax issues. If you are interested in regular updates, please check out our newsletter.