Draft revisions to China’s Certified Public Accountants Law propose fines up to 10x illicit gains and stricter penalties for audit misconduct.
China is set to impose stricter penalties on auditors involved in financial fraud, targeting falsified financial statements. A revised draft of the Certified Public Accountants Law would raise fines to up to ten times the illicit gains, doubling the current maximum. Authorities could also suspend operations, revoke licenses, or ban practitioners in severe cases.
The existing law, unchanged for over 20 years, has faced criticism for insufficient deterrence. The proposed changes expand liability beyond individual auditors to include clients and other colluding parties. Officials warn that financial fraud disrupts market fairness and risks systemic instability.
The draft is scheduled for a second reading by the National People’s Congress Standing Committee, signaling regulatory urgency to curb audit misconduct and restore investor confidence.