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November 3, 2017

National People’s Congress Alters Accounting Rules in Foreign NGO Law

As part of an ongoing effort to streamline red tape, on October 31 the National People’s Congress Standing Committee struck several provisions from a draft version of the Accounting Law currently under deliberation, which in turn affected the portion of the Foreign NGO Law related to accounting services. The alterations to the draft Accounting Law eliminate the need for accountants to obtain formal professional qualifications; instead, individuals’ capabilities and “professional morals” will qualify them to carry out this work.

For the Foreign NGO Law, this means that Article 24, which relates to registered representative offices’ accounting practices, has been changed. The following phrase has been stripped out of the law: “[and] employ accounting personnel with Chinese accounting qualifications to carry out accounting in accordance with the law” (“聘请具有中国会计从业资格的会计人员依法进行会计核算”). The article previously read, “Representative offices of overseas NGOs shall adopt the Chinese unified accounting system and employ accounting personnel with Chinese accounting qualifications to carry out accounting in accordance with the law. Financial accounting reports shall be audited by an accounting firm in the mainland of China” (“境外非政府组织代表机构应当执行中国统一的会计制度,聘请具有中国会计从业资格的会计人员依法进行会计核算。财务会计报告应当经中国境内会计师事务所审计”).

This suggests that foreign NGOs must still adopt the Chinese unified accounting system and have Chinese accounting firms audit their financial reports, but that the individuals doing this work need not have formal accounting qualifications. The China NGO Project will follow up with additional information as it becomes available.

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