The audit of Chinese-foreign joint ventures shall refer to the state audit institutions and social audit organizations to the companies, enterprises or other economic organizations of our country, to examine and notarize the economic activities and financial revenues and expenditures of joint ventures jointly organized by foreign companies, enterprises or other economic organizations in China.
Since Chinese-foreign joint ventures are jointly owned by Chinese-foreign joint ventures, the property has all the characteristics of a multi-component, therefore, the audit of Chinese-foreign joint ventures can be divided into two forms.
The first is the audit of state owned property joint ventures by state organs.
Second, the enterprise hires the accountant of the accounting firm to conduct the audit, the two parties sign the agreement, the contract. According to the regulations, the parties' investment certificates, annual accounting statements and accounting statements of enterprise liquidation must be verified and certified by certified public accountants in China.
The main contents of the audit of Chinese-foreign joint ventures
(1) capital verification: capital verification for short, total investment and registered capital. Paid-up capital; 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, whether the joint venture shall be examined and liquidated in accordance with the legal procedures of the joint venture shall be examined by the government auditor. Whether the capital verification report issued by its social audit is true and fair and reliable can be reviewed.
(2) annual accounting statement audit: we should 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. The reasonableness of the disposal of the remaining property and the audit opinion of the amount of the income tax shall be paid to the financial situation and the problems found in the liquidation of the enterprise.
(4) the audit personnel of the state audit institutions are the main contents of the law and discipline audit of Chinese-foreign joint ventures, and the legitimate rights and interests of all parties are upheld on the basis of the audit of the law.
Internal audit characteristics of Chinese-foreign joint ventures in 2017
With the further deepening of China's opening to the outside world, Chinese-foreign joint ventures have become more and more in China, and the establishment and strengthening of joint venture audit supervision are necessary measures to ensure the healthy development of the joint venture. It is also an important way to ensure the value of the domestic investment. The internal audit supervision of the joint venture is different from the audit supervision of the general unit. It has its own characteristics in the audit project, audit processing, the focus of audit and so on.
1. The board of directors decides that the audit organization shall adopt the internal audit institution of the entrusted investor.
According to the law of Chinese-foreign joint venture enterprise and its implementation regulations, the organization of the joint venture shall not set up a shareholders' meeting for the board of directors and management. The board of directors is the highest authority of the joint venture to determine all major issues of the joint venture. At present, most of the joint ventures have not established independent internal audit institutions. Internal auditing is generally conducted by the board of directors for internal audit of the joint venture. It is usually done by the board of directors to entrust the internal audit departments of each shareholder unit to form a joint audit group for auditing. In view of the above situation, as the internal audit supervision of the investment unit, the joint venture is generally not audited after the implementation of the audit, but only for the audit opinion. The joint audit team sends the approved audit opinions to the chairman of the audit unit, and notifies the unit to send the directors. The chairman of the board will convene the board of directors to study and discuss the audit suggestions or opinions.
2. The purpose of audit is clear. The purpose of the internal audit of joint ventures is clear, and the first and foremost is to protect the property safety of Chinese and foreign investors.
The task and duty of an internal audit is to uncover and punish the actions that violate the property of the enterprise. Through an internal audit to understand what the management organization is doing and how well it is doing, whether to operate according to the investor's will, whether there is an operator moral hazard or adverse selection, which results in the loss of shareholders' wealth and profits. The joint venture board understands the performance of the management personnel by reading the internal audit report to determine the salary and retention of the management personnel.
The pre-trial investigation stage shall collect relevant information according to the characteristics of the joint venture.
The information that should be collected during the pre-trial investigation phase: the articles of association of the joint venture, a capital contribution certificate of the parties to the joint venture, the joint venture during the audit financial report and certified public accountants audit report of annual report, the types of related party transactions between shareholders and (especially with the related party transactions between the foreign shareholder), company's main suppliers and sales customers, government approval, the preferential tax policy, all company bank account, company's internal regulations, etc. The articles of association of the joint venture shall be according to the principles stipulated in the contract of the joint venture, and the joint venture shall agree, and this provision should be consistent with the purpose of the enterprise, organizational principles and management methods and other matters, it is also a necessary legal document for the establishment of joint venture. Through the articles of association of the joint venture, we can understand the following contents: the purpose of the joint venture, the operation scope and the duration of the joint venture; The name of the parties to the joint venture, the registered state, the legal address, the name, duties and nationality of the legal representative; The total investment amount of the joint venture, the capital of the registered capital, the contribution of the parties to the joint venture, the proportion of capital contribution, the provisions for the transfer of capital contribution, the proportion of profit distribution and loss sharing; Responsibilities and appointment and removal methods of the board of directors, general manager, deputy general manager and other senior management personnel; Principles of finance, accounting and auditing system; Principles of finance, accounting, auditing system, etc.
3. The matters that should be noted during the audit implementation phase.
In the audit, it is necessary to pay attention to whether the operation of the joint venture has carried out the principle of equality and mutual benefit in accordance with the provisions of the contract and articles of association. If there is a serious violation of the interests of the other party, the director of the company violates the intention of the investor and infringes on the interests of the investor, etc. Such cases should be fully disclosed in the audit report. Such matters are common in the following forms:
1) The contribution of foreign capital is not real.
(1) The joint venture shall not be joint venture, and the purpose of the joint venture shall be lost.
(2) Foreign shareholders shall use the joint venture capital for free, and the term of operation shall be free of registered capital.
2) The audit focus of internal control of the joint venture company.
(1) In the audit, it is necessary to understand the leadership system of the joint venture, whether its board of directors can be held on a regular basis, whether it can make decisions on major issues and play its due role. To examine whether a party or business manager is above the board of directors and directly imposes its own will on the enterprise.
(2) The internal control system of the joint venture is generally determined by the research of the board of directors, and the internal audit should give priority attention.
3) The moral hazard and adverse selection risk of operators are one of the objectives of the internal audit of the joint venture.
4) The cost expense is not real, there are many of the phenomena which are less or more empty columns.
5) The foreign-related business of the joint venture company fails to perform its withholding obligations according to the provisions, thereby bringing the risk of tax inspection.
4. Regulations that make audit opinions and decisions in accordance with the law differ from those of other enterprises.
When we are in the audit of Chinese-foreign joint ventures, we should take the audit law of the People's Republic of China, the law of the People's Republic of China on Chinese-foreign joint venture enterprise law, the foreign investment enterprise accounting system, the provisions on financial management of enterprises with foreign investment and foreign investment enterprise income tax law and so on laws and regulations for audit basis. At the same time, the joint venture contract articles, board meeting decisions and minutes can be used as an important basis for audit. For the problems identified in the audit, the qualitative basis must be fully accurate and the audit opinions must be properly and feasible. These bases must be shown in the audit report so that the board of directors can discuss the research.
In conclusion, the internal audit of Chinese-foreign joint venture enterprises has its own characteristics compared with the internal audit of other organizations. In the actual work, we should make effective audit plans according to these characteristics. We should stand in an objective and just position to safeguard the legitimate rights and interests of both Chinese and foreign investors. At the same time, it is also important to protect the interests of the country and to promote the healthy development of joint ventures.
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