🇨🇳 Company audit in China

Lawyer, Family Office

Concept

All companies registered in mainland China (including WFOE and Free Trade Zone structures) must conduct an annual audit. The report is submitted to the State Taxation Administration (SAT) together with the annual tax return, and without it the company cannot complete annual reporting with the State Administration for Market Regulation (SAMR).

Unlike Hong Kong, Chinese audit requiresfull bookkeeping for the entire financial year— all transactions must be recorded in a local system (Kingdee, Yonyou or Suga) and reconciled with invoices (fapiao). The auditor works with this bookkeeping, not with bank statements.

When audit is required

• Mandatory annually for all types of Chinese companies — WFOE, Joint Venture, Representative Office, FTZ structures.
• The financial year in PRC coincides with the calendar year: from January 1 to December 31.
• Filing deadline — byMay 31of the following year.
• Late filing results in fines and risk of business license suspension.

Documents for auditor

• Complete bookkeeping for the financial year (general ledger, transaction journals)
• Bank statements for all Chinese accounts
• All received and issued fapiao (special and ordinary)
• Contracts with local counterparties
• Documents for fixed assets and intellectual property
• Previous year's audit report (for all audits except the first)

Cost

Cost depends on transaction volume and company category. Rates below are for a typical financial year.

Timeline

• Standard audit —4–6 weeksfrom the close of the financial year and provision of complete bookkeeping.
• Rush audit (2–3 weeks before SAT deadline) — available with 30% surcharge.
• A company's first audit takes 20–30% longer — requires setup of accounting policies and tax authority coordination.

Features

Unlike Hong Kong, in China audit is inseparable frombookkeeping services throughout the year. If bookkeeping is maintained chaotically or with violations (for example, invoices not closed with fapiao), the auditor will not be able to prepare the report — retrospective restoration of accounts will be required, which doubles cost and timeline.

Audit cost does not include:

• Bookkeeping itself — maintained as a separate service
• Filing of annual tax returns (CIT, VAT, individual income tax for employees)
• SAFE reporting for cross-border transfers
• Annual reporting to SAMR (separate registration procedure)

Related services

• 🇨🇳 Company registration in Guangzhou— WFOE and FTZ structures
• 🇭🇰 Company audit in Hong Kong— if you have HK Ltd with a Chinese subsidiary
• 🐉 Financing in China— for trading companies requiring bank leverage