The regulation, jointly released by the Ministry of Finance, the State-owned Assets Supervision and Administration Commission of the State Council, and the China Securities Regulatory Commission recently, aimed to promote fair competition in the certified public accountant profession and improve audit quality.
The state-owned enterprises and the listed companies should employ recruitment methods, including competitive negotiation, open bidding, and invitations to tender to fully understand the competence of the accounting firms, according to the regulation.
The financial departments could, under the law, take such regulatory measures as ordering the accounting firm which violates the provisions to rectify its misconduct, summoning the firm for talks, issuing an inquiry or warning letter, and demanding its public explanation, the regulation added.