Wed, Nov 28, 2007 - Page 12 News List

FSC gets greater powers to regulate accountants

PERMISSION Under certain circumstances, the FSC will have the authority to examine documents audited by an accountant if it has doubts about the information

By Flora Wang  /  STAFF REPORTER

An amendment to the Public Certified Accountant Law (會計師法) passed its third reading in the legislature yesterday, introducing tighter regulations on the responsibilities of accountants.

Article 49 of the amendment maintains an accountant's right to refuse to endorse a client's financial reports if the latter is known to have concealed or refused to provide the necessary financial information.

When such a situation arises, accountants will be expected to notify board members or supervisors about their client as well as the Financial Supervisory Commission (FSC).

Article 43 of the amendment says the FSC enjoys the authority to examine documents audited by an accountant if the commission has doubts regarding the finances of any person or any company endorsed by the accountant.

Likewise, the amendment also empowers the FSC to send officials to examine any accounting firms' business or their financial situation to "ensure that people's rights" are respected.

LEGAL PERSONS

The amendment also allows for an accounting corporation to be recognized as a "legal person." An accounting corporation as a legal person should consist on more than three certifified accountants.

Only the shareholders of a corporations are allowed to practice business on behalf of the corporation, the amendment stipulates.

The amendment also compels all accounting firms -- including accounting corporate organizations -- to insure their liabilities, emphasizing that the FSC has the power to suspend all or part of an accounting corporation's business for up to six months or revoke the corporation's license if its insurance does not meet the minimum requirements of the FSC.

BACK TO SCHOOL

To 'promote quality of service,' the amendment requires that all accountants, the amendment requires that all accountants pursue advanced study as regulated by the Public Certified Accountants Association, Republic of China.

The FSC can suspend business operations at firms that fail to observe the study requirement, the amendment stipulates, adding that those who are unable to meet the regulation within one year following the suspension may have their certificates revoked by the FSC.

The amendment also defines the punishment for individuals operating auditing businesses without the proper certificate.

Violators could be sentenced to five years in prison and/or be fined between NT$600,000 (US$18,600) and NT$3 million.

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