ACCOUNTING LAW OF THE PEOPLE’S REPUBLIC OF CHINA
(Adopted at the 9th Session of the Standing Committee of the Sixth National People’s Congress on January 21, 1985, amended according to the “Decision at the 5th Session of the Standing Committee of the Eighth National People’s Congress on December 29, 1993 on revising the accounting law of the People’s Republic of China”, and comes into force on January 1, 1994.)
CHAPTER ONE GENERAL PROVISIONS
CHAPTER TWO ACCOUNTING PRACTICES
CHAPTER THREE ACCOUNTING CONTROL
CHAPTER FOUR ACCOUNTING ORGANIZATIONS AND ACCOUNTING PERSONNEL
CHAPTER FIVE LEGAL RESPONSIBILITIES
CHAPTER SIX SUPPLEMENTARY PROVISIONS
Chapter One General Provisions Article 1. The law is formulated with a view to standardizing and strengthening accounting work, safeguarding the power and functions of accounting personnel according to law, and strengthening the role of accounting in maintaining the order of the socialist market economy, bettering economic management and improving economic efficiency.
Article 2. Government institutions, social organizations, enterprises, institutions, individual households engaging in industry and commerce and other organizations shall abide by this law in handling accounting affairs.
Article 3. Accounting organizations and personnel shall abide by laws and decrees and handle the accounting affairs and perform their work of computation, checking and supervision according to provisions of this law.
Article 4. Head of every unti shall lead the implementation of this law by accounting organizations and personnel and other people to ensure the legitimacy, trueness, accuracy and completeness of all accounting data and protect the powers and functions of accounting personnel from any encroachment. No one is allowed to retaliate against accounting personnel.
Accounting personnel who are strict in implementing the law, loyal to their posts and have made outstanding achievements shall be awarded spiritually or materially.
Article 5. The financial department of the State Council shall be responsible for the administration of the accounting work of national nature and the financial departments of local people’s governments shall be responsible for the administration of their respective local accounting work.
Article 6. A unified national accounting system shall be formulated by the Ministry of Finance of the State Council.
The financial departments of various provinces, autonomous regions and centrally controlled municipalities, departments in charge under the State Council, the General Logistics Department of the Chinese People’s Liberation Army may formulate specific procedures or supplementary provisions for implementing the unified national accounting system provided that the procedures and provisions are not in conflict with the provisions of this law and the unified national accounting system. Such procedures and provisions are subject to examination and approval or putting into record to the Financial Department of the State Council.
Chapter Two Accounting Practices
Article 7. Accounting processes and accounting practices shall be undertaken for the following affairs:
- Receipts and payments of money and negotiable securities;
- Receipts, dispatch, increase or decrease and use of property;
- The occurring and settlement of credits and debts;
- Increase or decrease of capital and funds and receipts and expenditure of expenses;
- Computation of income, expenses and costs;
- Computation and handling of financial results;
- Other accounting procedures and items requiring accounting practices.
Article 8. The fiscal year starts from January 1 and ends on December 31 on the Gregorian calendar.
Article 9. Renminbi shall be the standard currency for accounting.
Units which mainly use foreign currencies in their routine receipts and payments may also choose a foreign currency as their accounting unit. But the foreign currencies shall be converted into Renminbi in compiling accounting statements.
Article 10. The accounting documents, accounting books, accounting statements and other accounting data must conform to the provisions of the unified national accounting system. There shall be no forgery and alteration of accounting documents and accounting books and no submission of false accounting statements.
In case when computers are used in the accounting practices, the software applied and the accounting documents, accounting books, accounting statements and other data generated by the software shall meet the stipulations of the financial department of the State Council.
Article 11. The original documents shall be submitted to accounting organizations in handling the affairs listed in Article 7 of this law.
Accounting organizations shall check and verify the original documents and use the verified original documents to keeping accounts.
Article 12. All units shall set up accounting titles and accounting books according to the provisions of the unified national accounting system.
Accounting organizations shall keep accounts through the verified original documents and accounting documents in accordance with book- keeping rules stipulated by the unified national accounting system.
Article 13. All units shall establish a property inventory system to ensure that the records of accounting books tally with the objects and funds.
Article 14. All units shall compile accounting statements according to the provisions of the unified national accounting system and according to the records of account books and submit them to the financial or related departments.
Accounting statements shall be signed or affixed with seals by heads of the units and responsible members of the accounting units and accountants in charge. For units which have chief accountants, the accounting statements shall be signed or affixed with seals by the chief accountants.
Article 15. Records shall be properly kept for accounting vouchers, accounting books, accounting statements and other accounting data according to relevant State provisions. The period for keeping the records and procedures for the destruction of the records shall be determined by the financial department of the State Council together with relevant departments.
Chapter Three Accounting Control
Article 16. The accounting organizations and accounting personnel of all units shall supervise on the accounting of their units.
Article 17. Accounting organizations and accounting personnel shall refuse to accept false or illegal original vouchers and return the inaccurate and incomplete original vouchers for correction.
Article 18. When accounting organizations and accounting personnel find any records of accounting books not being tallied with the objects or funds on hand, they shall handle them according to relevant regulations. If they are not empowered to handle them, they should report to their heads immediately and request for investigation and handling the matter.
Article 19. Accounting organizations and accounting personnel shall refuse to accept receipts and payments that violate the law.
When accounting organizations and accounting personnel deem the receipts and expenditures illegal, they should stop and correct them. Should they fail to stop and correct them, they should file written reports to the heads of their units, requesting for handling the matter. Heads of units shall make written decisions within ten days after the written reports are received and bear the responsibilities for the decisions.
If accounting organizations and accounting personnel fail to stop and correct the illegal receipts and expenditure or report to the heads of their units, they should also bear the responsibility.
For receipts and expenditures that seriously violate the law and harm the interests of the State and the public, accounting organizations and accounting personnel should report to the units in charge or to financial, auditing and tax authorities. The authorities which receive the reports should be responsible for handling the cases.
Article 20. All units shall accept the supervision by financial, auditing and tax authorities according to law and other relevant regulations of the State, providing them with true accounting vouchers, accounting books, accounting statements and other accounting data and relevant information. They are not allowed to refuse to give or conceal any information or give false information.
Chapter Four Accounting Organizations and Accounting Personnel
Article 21. All units shall set up their own accounting organizations according to the requirements of their accounting operations or appoint accounting personnel in relevant organizations and designate accounting personnel in charge. If a unit does not have the conditions, it may entrust accounting consulting and service organizations set up with approval to keep books on its behalf. Large and medium-sized enterprises, institutions and chief charging operational departments may appoint chief accountants. The post of chief accountant shall be held by people with at least the qualification of a certified accountant. Accounting organizations shall establish an auditing system.
Cashiers are not allowed concurrently to take charge of auditing, keep accounting records or register income, expenses and credits and liabilities.
Article 22. The principal responsibilities of accounting organizations and accounting personnel are:
- To carry out accounting practices according to the provisions of Chapter Two of this law;
- To exercise supervision on work of accounting according to the provisions of Chapter Three of this law.
- To draft specific precedures for the handling of accounting affairs of their own units;
- To participate in the drafting of economic plans, operational plans and assessment, analyze the implementation of budgets and financial plans; and
- To undertake other affairs relating to accounting.
Article 23. Accounting personnel should have qualified professional knowledge. The appointment and removal of the leading members of accounting organizations and accountants of State enterprises and institutions shall have the consent of departments in charge. It is not allowed to remove such personnel at will. If an accountant loyal to post and keeping to principles is wronged, the department in charge should order the unit to correct. If an accountant is found to have committed dereliction of duty, wavered in principles and therefore not suited to the accounting post, the department in charge should order the unit concerned to dismiss or remove the accountant in question.
Article 24. When transferred or leaving their posts, accounting personnel must go through the hand-over procedures with the people to take charge.
The hand-over procedure for general accounting personnel shall be supervised by the heads of the accounting organization and accountants in charge. The hand-over procedures for heads of the accounting organizations or accountants in charge shall be supervised by the heads of the units. If necessary, the procedures shall be supervised by people sent by department in charge.
Chapter Five Legal Responsibilities
Article 25. If a head of a unit or an accountant has violated the provisions on accounting practices provided for in Chapter Two of this law and the case is serious, administrative punishment shall be given.
Article 26. If a head of a unit, an accountant or other people are found to forge, alter and deliberately destroy accounting vouchers, accounting books, accounting statements and other accounting documents or evade tax or harm the interests of the State and the public by using false accounting vouchers, accounting books, accounting statements and other accounting documents, the cases shall be handled by financial, auditing and tax authorities or other departments in charge according to law and administrative decrees. If the cases are serious enough to constitute a crime, criminal responsibilities shall be affixed.
Article 27. If accounting personnel accept untrue and illegal original vouchers or fail to file written reports to the heads of their units on the law-violating receipts and expenditures or fail to report to the department in charge of financial, auditing and tax authorities the receipts and expenditures that seriously violate the law and harm the interests of the State and the public and the cases are serious, administrative punishments shall be given. If the acts have caused serious losses in public or private property and are serious enough to constitute a crime, criminal responsibilities shall be affixed.
Article 28. If heads of units have caused serious consequences by giving permission to handle illegal income or expenditure despite written reports filed by accounting personnel according to the provisions of 2 of Article 19 of this law or failing to take decisions on such income or expenditure after the time limit without justifiable reasons, administrative punishments shall be given. If the cases have caused serious losses to public or private property and constituted a crime, criminal responsibilities shall be affixed.
Article 29. Heads of units and other personnel shall be punished by administrative measures if they are found to have retaliated accounting personnel who perform their duties well. If the cases are serious enough to constitute a crime, criminal responsibilities shall be affixed.
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