Letter of reply from the Ministry of Finance on Proposal No. 03914 of the First Meeting of the 14th

Zhang Ping and four other members:

Your "Proposal on the Suggestions on Regulating the Bidding Procedures in the Accountant Service Market" has been received and is hereby replied as follows:

In recent years, the Ministry of Finance has attached great importance to the promotion of fair competition in the CPA profession, earnestly implemented the Opinions of the General Office of the State Council on Further Regulating the Order of Financial Auditing and Promoting the Healthy Development of the CPA Profession (Guo Ban Fa [2021] No. 30, hereinafter referred to as the Guo Ban Fa [2021] No. 30) on the requirement of "promoting the construction of quality-oriented mechanism for selecting and recruiting accounting firms", strengthening the supervision and management of government procurement, and standardizing the selection and recruitment process of accounting firms. (hereinafter referred to as Guo Ban Fa [2021] No. 30) on "Promoting the Construction of Quality-oriented Accounting Firm Selection and Recruitment Mechanism", strengthening the supervision and management of government procurement, standardizing the process of selecting and recruiting accounting firms, and maintaining a fair and competitive accounting market environment.

I. Policies and Measures in Government Procurement

Accounting and auditing services are an important part of government procurement services. In recent years, the Ministry of Finance has continuously improved the professional level of accounting and auditing service procurement by optimizing the procurement method system, improving the procurement evaluation system, and strengthening the construction of procurement requirement standards. First, it has issued the Interim Measures for the Administration of Government Procurement Framework Agreement Procurement Methods (Ministry of Finance Decree No. 110) to standardize the procurement activities of multi-frequency and small-amount accounting and auditing services. Secondly, it has further clarified the application of the lowest bid evaluation (auditing) method and the comprehensive scoring method, and stipulated that for technically complex, special large-scale equipment, specialized services and other projects, the purchaser may adopt the comprehensive scoring method to evaluate the cost-effectiveness of the products and promote high-quality and good-price procurement. Thirdly, it promotes the study and formulation of standards for accounting and auditing service requirements, provides benchmarks and references for purchasers to carry out procurement of relevant professional services, and improves the effectiveness of competitive offers.

Regarding your suggestion of "allowing professionals with the qualification of certified public accountants to participate in the bid evaluation committee, and improving the network bidding method", at present, the evaluation experts of government procurement projects are generally drawn in accordance with the procurement items, so as to ensure the professionalism of the experts as far as possible. For technically complex, highly specialized procurement projects, it is difficult to determine the appropriate evaluation experts through the random method, the purchaser can also select their own evaluation experts in the corresponding professional fields in accordance with the law. Meanwhile, the Ministry of Finance has actively promoted the construction of the electronic government procurement platform, which has effectively simplified the procurement process and improved the procurement efficiency.

As a next step, the Ministry of Finance will reform the system of management and selection of evaluation experts by amending the Government Procurement Law and other laws and regulations, further optimizing the government procurement methods and procedures, and promoting the improvement of the quality of procurement of professional services.

Policies and Measures on Selection and Employment of Accounting Firms by State-owned Enterprises and Listed Companies

In May this year, the Ministry of Finance, together with the State-owned Assets Supervision and Administration Commission of the State Council and the China Securities Regulatory Commission, issued the Administrative Measures for Selection and Employment of Accounting Firms by State-Owned Enterprises and Listed Companies (Caixin [2023] No. 4), which regulates the behavior of selection and employment of accounting firms by state-owned enterprises and listed companies, promotes fair competition in the certified public accounting industry, and facilitates the enhancement of the quality of audit. The main contents are as follows: First, limiting the vicious competition at low prices. In accordance with the requirements of the State Council [2021] No. 30, the evaluation criteria and price weighting formula have been improved. That is, the weight of the score for the quality management level shall be no less than 40%, and the weight of the score for the audit fee offer shall be no more than 15%. For the case of a decline in audit fees at the time of the continuous appointment, it is clearly stipulated that if the audit fee declines by more than 20%, the state-owned enterprises and listed companies shall provide an information note or disclose it as required. Second, to promote fair competition. State-owned enterprises and listed companies are expressly required to safeguard the fairness and impartiality of the selection and appointment of accounting firms, and shall not restrict or exclude potential accounting firms to be appointed under unreasonable conditions, and shall not customize the selection and appointment conditions for individual accounting firms. Thirdly, the responsibility of the audit committee shall be realized. It clarifies the responsibilities and key concerns of the audit committee in the selection and engagement of accounting firms by enterprises, and increases the disclosure obligations of enterprises in respect of reports on the performance of accounting firms and reports on the fulfillment of supervisory responsibilities by audit committees.

In addition, in July 2022, 13 ministries and commissions, including the National Development and Reform Commission, also jointly issued Several Opinions on Strictly Enforcing Bidding and Tendering Regulations and Systems to Further Regulate the Behavior of Bidding and Tendering Entities (Development and Reform Regulation [2022] No. 1117), which further strengthens the supervision of bidding agents, gives play to the role of industry associations as a self-disciplinary body, strengthens the management of bidding experts, and promotes the entire process of bidding and tendering electronically.

As a next step, the Ministry of Finance will fully absorb and draw on the suggestions of the members, together with the relevant departments to continue to regulate the state organs, institutions, state-owned enterprises, listed companies and other types of subjects to select and hire accounting firms, and strive to create a fair and just, standardized and efficient, sunny and transparent market environment.

Thank you for your attention and support to the financial work, and welcome any further valuable comments.

Contact unit and telephone: Treasury Department of the Ministry of Finance 010-68552389

　　                          Ministry of Finance

　　                           2023年8月18日