Measures for Assets and Capital Verification of State-Owned Enterprises


Promulgation date: 09-09-2003

Effective date: 09-09-2003

Department: COMMISSIONS & MINISTRIES OF THE STATE COUNCIL

Subject: OTHER PROVISIONS


Order of the State-Owned Assets Supervision and Administration Commission of the State Council

(No.1)

The Measures for Assets and Capital Verification of State-Owned Enterprises, which were adopted at the director's executive meeting of the State-Owned Assets Supervision and Administration Commission (SASAC) of the State Council, are hereby promulgated and shall take effect as of the day of promulgation.

September 9, 2003


Chapter I General Provisions
Chapter II Scope of Assets and Capital Verification
Chapter III Contents of Assets and Capital Verification
Chapter IV Procedures of Assets and Capital Verification
Chapter V Organization of Assets and Capital Verification
Chapter VI Requirements of Assets and Capital Verification
Chapter VII Legal Liabilities
Chapter VIII Supplementary Provisions


Chapter I General Provisions

Article 1 In order to strengthen the supervision and administration of state-owned assets of enterprises, to regulate the assets and capital verification of enterprises, to truly reflect the assets and financial status of enterprises, to improve the basic administration of enterprises, and to provide basis for scientific evaluation and standard assessment of the business performance of enterprises, as well as the maintenance and appreciation of the state-owned assets, the present Measures are enacted in accordance with the Interim Regulation on Supervision and Administration of State-Owned Assets of Enterprises, and other laws and regulations.

Article 2 The term "assets and capital verification" as mentioned in the present Measures refers to the activities of the organs of state-owned assets supervision and administration to, according to the special work requirements of the state or the needs of specific economic acts of enterprises, organize the enterprises to check their accounts and properties pursuant to the work procedures, methods and policies set forth, and to determine the various asset gains and losses of those enterprises according to law, so as to truly reflect the assets value of the enterprises and re-verify the state-owned capital of the enterprises.

Article 3 The present Measures shall apply to the assets and capital verification of the enterprises, or the subsidiaries or branches thereof, for which the State Council, the people's governments of the provinces, autonomous regions, and municipalities directly under the Central Government, and the people's governments at the level of cities divided into districts or autonomous prefectures perform the functions and duties as capital contributors.

Article 4 Enterprise assets and capital verification includes check of accounts and assets, re-appraisal of value, determination of gains and losses, verification of capital, and improvement of systems, etc.

Article 5 The assets losses and outstanding accounts found out in assets and capital verification shall be dealt with in accordance with the relevant laws, regulations, and rules concerning the assets and capital verification, and the financial and accounting systems of the state.

Article 6 The organs of state-owned assets supervision and administration at various levels are the authorities supervising and administering the assets and capital verification of enterprises.


Chapter II Scope of Assets and Capital Verification

Article 7 The organs of state-owned assets supervision and administration at various levels may request an enterprise to carry out assets and capital verification if:

  1. the asset losses and outstanding accounts of that enterprise exceed the owners' equity, or the accounting information of that enterprise is seriously distorted or in serious unconformity with the facts;
  2. the enterprise has incurred significant losses as a result of serious natural disasters or other serious and emergent factors of force majeure, etc;
  3. serious abnormalities occur to the accounts of that enterprise, or its state-owned assets suffer significant losses;
  4. other situations in which assets and capital verification shall be carried out occur.

Article 8 If the assets and capital verification needs to be carried out in any of the following situations, the enterprise involved shall file an application with the organ of state-owned assets supervision and administration at the corresponding level for approval:

  1. The division, merger, restructuring, reform, cancellation, or other economic acts of the enterprise involve significant change of the assets or ownership structures;
  2. The significant alteration of the accounting policies of the enterprise involves major changes of the methods of accounting for assets;
  3. The enterprise conducts any specific economic act for which assets and capital verification must be carried out as provided for by the relevant laws and regulations of the state.

Chapter III Contents of Assets and Capital Verification

Article 9 Account check refers to fully checking and verifying the basic financial data of an enterprise, such as various bank accounts, accounting entries, cash on hand, and negotiable securities, etc, as well as to fully checking and verifying the internal capital transactions of the enterprise, so as to ensure that the accounts of the enterprise accord with each other and with the vouchers and to promote the completeness, accuracy, and truthfulness of the accounts of the enterprise.

Article 10 Assets check refers to fully checking, verifying and ascertaining the assets of an enterprise. In assets check, the check of materials shall be combined with the verification of accounts, and the check of assets shall be combined with the verification of liabilities and owners' equity, and emphasis shall be put on the check of various receivable and advanced payments, various investments and off-sheet assets, as well as the relevant pledges and guarantees of the enterprise.

The enterprise shall classify and put in sequence the various kinds of assets gains, losses, wastes, and bad loans found out according to the requirements of assets and capital verification, and shall render the relevant handling opinions.

Article 11 Re-evaluation refers to re-evaluating, according to the methods and standards set forth by the state, the major fixed assets and current assets of an enterprise of which the book value deviates relatively far from the actual value.

If the enterprise has made the re-evaluation in the previous assets and capital verification, or has made the assets evaluation due to certain economic acts, the re-evaluation may be not carried out any more.

Article 12 Confirmation of gains and losses means that the organs of state-owned assets supervision and administration confirms, in accordance with the policies of the state on assets and capital verification and the relevant financial and accounting systems, the various asset gains and losses and outstanding accounts reported by the enterprises.

The specific measures for confirmation of the asset gains and losses of enterprises shall be formulated separately.

Article 13 Verification of capital means that the organs of state-owned assets supervision and administration, on the basis of the results of assets and capital verification reported by the enterprises, such as asset gains and losses, and capital, etc, and in accordance with the policies of the state on assets and capital verification and the relevant financial and accounting systems, organize examination and approve the financial treatment, and re-verify the amounts of state-owned capital actually possessed by the enterprises.

Article 14 The re-verified amount of the state-owned capital possessed by an enterprise shall be taken as the base by the organs of state-owned assets supervision and administration for the evaluation of the enterprise's business achievements and the assessment of maintenance and appreciation of state-owned assets.


Chapter IV Procedures of Assets and Capital Verification

Article 15 The enterprise assets and capital verification shall be carried out pursuant to the following procedures except when the state has otherwise provisions:

  1. The enterprise files an application;
  2. The organ of state-owned assets supervision and administration makes an official reply approving putting the verification on file;
  3. The enterprise works out the implementation scheme, and organizes the check of accounts and assets, etc;

  4. Public intermediary agencies are retained to make special financial auditing on the assets and capital verification results and to provide appraisal certification for the relevant gains and losses;

  5. The enterprise submits the report on the results of assets and capital verification and the special auditing report prepared by the public intermediary agencies;
  6. The organ of state-owned assets supervision and administration confirms the asset gains and losses, and makes an official reply with respect to the results of capital verification;
  7. The enterprise adjusts its accounts according to the results of the assets and capital verification;
  8. The enterprise makes the relevant ownership alteration registration and industry and commerce alteration registration;
  9. The enterprise improves its various rules and systems.

Article 16 Where an enterprise to which the state contributes capital needs to carry out assets and capital verification due to significant ownership changes, such as the transfer of controlling position as a result of the assignment or sale of state-owned property, etc., the organ of state-owned assets supervision and administration at the corresponding level shall organize the verification process and retain the public intermediary agencies.

Article 17 Where the subsidiary of an enterprise to which the state contributes capital needs to carry out assets and capital verification due to significant ownership changes, such as the transfer of controlling position as a result of the assignment or sale of state-owned property, etc., the enterprise may organize the asset and capital verification by itself, and shall apply for approval for the handling of the relevant asset gains and losses and outstanding accounts pursuant to the stipulated procedures.

Article 18 The application of an enterprise for assets and capital verification shall specify the cause, scope, organization, steps, and starting date of the verification.

With respect to the application for assets and capital verification filed by the enterprise, the organ of state-owned assets supervision and administration shall make examination pursuant to the present Measures and the relevant provisions of the state, and make an official reply to that enterprise if approving it to carry out the verification.

Article 19 An enterprise shall carry out the assets and capital verification pursuant to the following steps:

  1. Appointing a temporary office of assets and capital verification consisting of the internal financial management body, the assets management body, or several such bodies; and such temporary office shall be called as the assets and capital verification office, which shall assume the concrete organization of the verification work;
  2. Working out the implementation scheme on assets and capital verification of the enterprise;
  3. Retaining qualified public intermediary agencies;
  4. Concretely organizing and implementing various work pursuant to the contents and requirements of the assets and capital verification;
  5. Submitting to the organ of state-owned assets supervision and administration at the corresponding level the reports on the results of assets and capital verification signed and affixed with the official stamp by the legal representative of the enterprise.

Article 20 The implementation scheme of assets and capital verification of an enterprise and the list and qualifications of the public intermediary agencies retained shall be submitted to the organ of state-owned assets supervision and administration at the corresponding level for record.

Article 21 The reports on the results of assets and capital verification of an enterprise shall mainly include:

  1. The report on the assets and capital verification, which mainly shows the basic information about the assets and capital verification of that enterprise, including: the starting date, scope, contents, and results of the assets and capital verification, as well as the financial status of that enterprise on the starting date;
  2. The statements and the relevant materials of assets and capital verification filled in pursuant to the prescribed format and the prescribed software;
  3. The assets gains and losses, outstanding accounts, and other matters that need to be reported for treatment, the relevant materials shall be compiled into separate volumes attached with the relevant original vouchers and legally binding certificates;
  4. In the case when a subsidiary is a joint stock venture, the written certifications of approval of the board of directors or shareholders' meeting of that enterprise for the treatment of the gains and losses found out through the assets and capital verification shall be attached;
  5. The special financial auditing report on the assets and capital verification signed by a certified public accountant, and the enterprise accounting statements after the assets and capital verification prepared by a public intermediary agency according to the results thereof;
  6. Other materials that need to be provided for future reference.

Article 22 The organ of state-owned assets supervision and administration shall, after receiving the reports and materials of the assets and capital verification results submitted by an enterprise, make a careful verification, and make an official reply confirming the capital verified within a prescribed time limit.

Article 23 The enterprise shall make financial treatment pursuant to the official reply of the organ of state-owned assets supervision and administration concerning the assets and capital verification, and shall report the results of the treatment to the said organ for record.

Article 24 The enterprise shall, within 30 workdays from receiving the reply concerning the assets and capital verification, make the corresponding ownership alteration registration with the organ of state-owned assets supervision and administration at the corresponding level, and where any alteration of the enterprise's registered capital is involved, that enterprise shall make the industry and commerce alteration registration with the department of industry and commerce administration.


Chapter V Organization of Assets and Capital Verification

Article 25 The principles of unified regulation and leveled administration shall be adhered to in the assets and capital verification of an enterprise, and the verification work shall be subject to the organization and direction, and supervision and inspection of the organ of state-owned assets supervision and administration at the corresponding level.

Article 26 The organs of state-owned assets supervision and administration at various levels shall be responsible for the assets and capital verification of enterprises approved or handed over by the people's governments at the corresponding levels.

Article 27 SASAC of the State Council shall perform the following functions and duties in assets and capital verification of enterprises:

  1. Formulating the regulation, systems, and methods of assets and capital verification of enterprises of the whole country;
  2. Assuming the organization and direction, and the supervision and inspection of the assets and capital verification of the enterprises to which the state contributes capital;
  3. Assuming the confirmation of the assets gains and losses of the enterprises to which the state contributes capital, and the verification of the state-owned capital possessed by those enterprises;
  4. Directing the organs of state-owned assets supervision and administration of the localities to carry out assets and capital verification of enterprises.

Article 28 The organs of state-owned assets supervision and administration of the localities shall perform the following functions and duties in assets and capital verification of enterprises:

  1. Pursuant to the relevant state regulations, systems, methods, and work procedures of assets and capital verification, assuming the organization and direction, and the supervision and inspection of the assets and capital verification of the enterprises to which the people's governments at the corresponding levels contribute capital;
  2. Assuming the confirmation of the assets gains and losses of the enterprises to which the people's governments at the corresponding levels contribute capital, and the verification of the state-owned capital possessed by those enterprises;
  3. Directing the organs of state-owned assets supervision and administration at the next lower levels in assets and capital verification of enterprises;
  4. Promptly reporting the work progress to the organs of state-owned assets supervision and administration at the next higher levels.

Article 29 The assets and capital verification body of an enterprise shall organize the assets and capital verification of that enterprise, submit to the organ of state-owned assets supervision and administration at the corresponding level the relevant materials, and organize the enterprise and its subsidiaries to adjust their accounts pursuant to the official reply of the said organ concerning the assets and capital verification.

Article 30 With respect to the assets and capital verification of various kinds of diversified investment ventures funded by several enterprises, the actually controlling enterprise or the competent enterprise selected through agreement shall assume the organization work, and shall notify in good time the other parties concerned of the relevant results of the assets and capital verification.


Chapter VI Requirements of Assets and Capital Verification

Article 31 The organs of state-owned assets supervision and administration at various levels shall strengthen the organization and leadership of assets and capital verification of enterprises, strengthen the supervision and inspection, and shall, in the examination of assets and capital verification and in the confirmation of the asses losses, strictly carry out the relevant laws, regulations, rules, and relevant financial and accounting systems of the state concerning the assets and capital verification, and shall impose strict control, handle the matters according to law, and be strict in disciplines.

Article 32 The organs of state-owned assets supervision and administration at various levels shall supervise the assets and capital verification of enterprises and the auditing of assets and capital verification made by the relevant public intermediary agencies, and shall examine the procedures of issuance and the contents of the special financial auditing reports issued by the public intermediary agencies.

Article 33 The enterprises shall make full and thorough assets and capital verification, avoid repetition or omission, and make sure that the accounts are in accordance with the facts, and shall check the basic capital situation of themselves to find out the conflicts and problems existing in their business management, and thus to improve the systems, strengthen the management, and stop the existing insufficiencies.

Article 34 The enterprises shall stick to the principle of being practical and realistic in assets and capital verification, faithfully pass on the existing problems, report in good time the problems found out through the verification, and may not hide the problems or make falsified reports.

The enterprises shall provide legally binding certifications for the asset losses they apply for treatment in the assets and capital verification.

Article 35 The enterprises shall, in the assets and capital verification, earnestly sort out the overstocks piled up for ages, as well as the various kinds of fixed assets and project materials that are unused, left, idled, or eliminated due to outdated technology, and shall organize organs concerned to dispose of them, and actively convert such assets into cash or take back the residual values.

Article 36 The enterprises shall, after finishing the assets and capital verification, fully sum up and carefully analyze the problems existing in the daily assets and financial management, propose the corresponding rectification measures and implementation plans, strengthen the internal financial control, establish the liability system for asset losses, and further improve the systems of auditing of enterprise economic liabilities and of auditing of the enterprise principals leaving the posts.

Article 37 The assets of which the ownership is unclear or disputed in the assets and capital verification of enterprises may be, after the assets and capital verification is finished, separately reported to the organs of state-owned assets supervision and administration at the corresponding level for determination.

Article 38 The enterprises shall strengthen the management of the non-performing loans, non-performing investments, and losses of material assets that can be written off as approved by the official reply, establish the system of records of written-off accounts, organize the organs concerned or set up a special body to actively sort out and recover the assets, so as to avoid the losses of state-owned assets.

Article 39 The enterprises shall earnestly check the various off-sheet assets and debts in the assets and capital verification, and shall bring into its daily assets and financial management in good time the asset gains approved to be brought into the accounts and the relevant debts approved to undergo the financial treatments.

Article 40 The enterprises shall, with respect to the managerial problems found in the assets and capital verification, earnestly sum up the experience, make clear the responsibilities, establish various management systems, and strictly implement such systems. The enterprises shall establish a mechanism of non-performing assets management to consolidate the achievements made in the assets and capital verification.

Article 41 Except the special enterprises involving state security, the results of assets and capital verification of enterprises shall be entrusted to qualified public intermediary agencies for special financial auditing.

Article 42 The public intermediary agencies shall, pursuant to the principles of independency, objectiveness, and justice, process the necessary auditing procedures, carefully verify the assets and capital verification materials of enterprises, and carry out the verification of materials and finance status pursuant to the provisions. With respect to the assets gains and losses of the enterprises, the agencies shall determine the standards on the basis of the gains and losses provided for by the state policies concerning the assets and capital verification and the relevant financial and accounting systems, make professional judgment and rule-compliance evaluation on the basis of thorough investigation, study, and demonstration, present the economic appraisal opinions, and issue the appraisal certification.

Article 43 The enterprises conducting the assets and capital verification shall actively cooperate with the public intermediary agencies, and provide the necessary materials and information for the auditing work and economic appraisal. No enterprise or individual may intervene in the normal professional practice of the public intermediary agencies. The public intermediary agencies enjoy the powers and bear the obligations provided for by the law in their auditing work and economic appraisal work.

Article 44 The enterprises and public intermediary agencies shall, pursuant to the requirements of accounting archives management, keep in good conditions the manuscripts related to the assets and capital verification for future reference.


Chapter VII Legal Liabilities

Article 45 If an enterprise violates the procedures provided for in the present Measures in assets and capital verification, the organ of state-owned assets supervision and administration at the corresponding level shall order it to correct the act within a prescribed time limit; if the quality of the assets and capital verification fails to meet the prescribed requirements, the organ mentioned above shall order that enterprise to carry out the assets and capital verification again.

Article 46 If an enterprise intentionally conceals the facts or practices frauds and provides falsified accounting materials in assets and capital verification, the organ of state-owned assets supervision and administration at the corresponding level shall order it to correct the act, and punish it pursuant to the Accounting Law of the People's Republic of China and the Interim Regulation on the Supervision and Administration of State-Owned Assets of Enterprises, and other relevant laws and regulations; and the enterprise principal and the directly liable personnel shall be given administrative and disciplinary sanctions according to law.

Article 47 If the principal or the relevant staff members of an enterprise embezzle or transfer state-owned assets by concealing the facts, selling the assets at low prices, or reporting untrue losses, etc., in assets and capital verification, the organ of state-owned assets supervision and administration at the corresponding level shall order the relevant person to correct the act, and give him administrative and disciplinary sanctions thereto according to law; and the criminal liabilities shall be prosecuted if a crime is constituted.

Article 48 The principal of an enterprise shall be liable for the truthfulness and completeness of the results of the assets and capital verification; and the public intermediary agencies shall be liable for the accuracy and reliability of the auditing reports on the assets and capital verification of the enterprise.

Article 49 Where a public intermediary agency and the relevant parties collude with each other, practice frauds, and provide falsified appraisal materials in assets and capital verification, the organ of state-owned assets supervision and administration at the corresponding level shall investigate and publish them in conjunction with the relevant departments; and the criminal liabilities shall be prosecuted if a crime is constituted.

Article 50 If the functionaries of the organs of state-owned assets supervision and administration practice favoritism and fraudulent acts in the examination of the results of assets and capital verification of enterprises, and commit gross work negligence, they shall be given administrative and disciplinary sanctions according to law; and the criminal liabilities shall be prosecuted, if a crime is constituted.


Chapter VIII Supplementary Provisions

Article 51 The organs of state-owned assets supervision and administration of the provinces, autonomous regions, municipalities directly under the Central Government, and cities directly under State Planning may formulate the concrete implementation measures of their respective regions in accordance with the present Measures.

Article 52 The assets and capital verification of the enterprises under the administration of central departments shall be carried out by referring to the present Measures.

Article 53 If any rules and regulations concerning the assets and capital verification enacted prior to the implementation hereof are inconsistent with the present Measures, the latter shall prevail.

Article 54 The power to interpret the present Measures shall remain with SASAC of the State Council.

Article 55 The present Measures shall take effect as of the day of promulgation.