Guangzhou Zhongtang Certified Public Accountants - Your Trustworthy Partner for

What do our services include? 

We provide professional financial auditing  to help foreign-invested enterprises avoid the risks of operating in China，Our financial auditing services include the following:

1. Capital verification

The auditors will examine the cash inventory, checking to see whether this matches the accounting records and whether the cash ratio holding aligns with the stated total capital amount. The bank reconciliation process will also be a primary focus at this stage, and auditors will investigate two aspects. Firstly, whether relevant records on the accounting books are consistent with bank records (that is, checking the balance, deposit in transit, borrowings etc.) and secondly, whether there are any inactive accounts.

2. Asset inventory and evaluation

Next, the auditors will investigate the goods in stock and the fixed assets to determine whether this lines up with the records of the accounting books. An examination will take place to determine whether the documentation and the tax verification report are complete for the disposal of the scrapped products/assets, idling products/assets, and defective products. Auditors will also recalculate the impairment of the assets as needed.

3. Account checking

The auditors will check the account to verify the transactions recorded. For creditor’s rights, this will concentrate on:

Accounts receivable (AR) – verifying the amount; assessing the risk of bad debts by analyzing the aging of the AR and the debtor’s financial situation;

Other receivables – collecting them in a timely manner to avoid unnecessary loss and tax risks; and

Receivables in advance – carrying income forward according to regulations and checking whether the profit needs to be adjusted.

For debt, the following aspect will be examined:

Accounts payable – verifying the amount; checking whether the bookkeeping and the estimated amount are correct and reasonable; and

Other payables – whether there are long-term unpaid balance or potential tax risks.

4. Related-party transaction evaluation

The auditor will also check the related-party transactions to evaluate whether these payments have been made in time, whether the supporting documents are complete, and whether there are any unreconciled balance pending for clean-up. Similarly, the auditor will assess whether the transfer pricing is in line with the arm’s length principle to avoid potential tax adjustments and penalties.

5. Expenses checking

The auditor will also check to see if a company’s relevant invoices and other documentation have been obtained for the recorded expenses. The auditor will assist businesses in ensuring that any inter-term expenses are recorded in the account before the end of December and any accrued expenses are properly recorded in the books.

In terms of pre-tax deductible expenses, deduction caps, and R&D expenses – supporting documents will be verified, and assessed as to whether the thresholds are met, and the deductions made are accurate to undergo a final check.

6. Financial statement analysis

Financial statements are not only important in determining tax liabilities but are also key to helping firms understand their own financial situation. Auditors generally focus on the balance sheet and the profit statement analysis to reveal the capital structure, the profit, cost and expenses, as well as losses, etc.

7. Preferential tax evaluation

Under the current law, enterprises can make a self-assessment as to whether they are qualified to enjoy the CIT incentives and retain relevant documents for potential future inspection from the tax bureaus. This simplifies the process for enjoying CIT incentives, but it also increases the tax risks where there has been a misjudgment. So, auditors generally will help to evaluate relevant qualifications in the annual audit.

Feel free to reach out to me directly at limianron@163.com.

Our office phone number is 020-38669364, 

and my mobile number is 13430244051.

As Guangzhou Zhongtang Certified Public Accountants,

we are excited to partner with you,

guiding your business on the path to success in China.