Certified Public Accountant Law Amendment: Strengthening penalties for audit fraud and other violations

[Caixin] The Certified Public Accountant Law, in effect for over 30 years, is set for its second revision. The draft amendment to the CPA Law, released for public consultation by the National People’s Congress on February 27, overall strengthens the regulation and standardization of accountants and accounting firms’ practices, and raises penalties for illegal activities such as audit fraud from five times the illegal gains to ten times.

The draft amendment to the CPA Law will be open for public comment from February 27 to March 28, 2026. The law has been in effect since 1994 and was amended once in 2014. When Minister of Finance Lan Fuan explained the draft amendment to the Standing Committee of the National People’s Congress, he stated that the current law’s basic framework and main systems are suitable for the development of the CPA industry. However, in recent years, new situations and problems have emerged, such as some accounting firms and CPAs engaging in unstandardized practices, failing to fulfill their watchdog responsibilities, inadequate regulatory measures, insufficient penalties, frequent cases of financial misrepresentation by companies, and audit fraud in listed companies. Therefore, it is necessary to make targeted modifications to the current law.