Contents
1、 The National Federation of Certified Public Accountant Associations of the Republic of China Introduction ．．．．．．．．．．．．．． P.2-P.5
2、 The Norm of Mutual Evaluations Conducted by the Asia/Pacific Group on Anti-Money Laundering for Certified Public Accountant （CPA）of the Republic of China ．．．．．．．．．．．．．． P.6-P.15
3、 The Bulletin of Norm of Professional Ethics for Certified Public Accountant of the Republic of China.（Published by Professional Ethics Committee of NFCPAA.）．．．．．．．．P.16
4、 The Bulletin of Ethics for Professional Accountants NO.8 Custody of Client’s Monies By Entrust．．．．．．．．．．．．．． P.17-P.19
5、 The Appraisal of CPA Audit Service．．．．P.20-P.21
The National Federation of Certified Public Accountant Associations of the Republic of China
Introduction
Address: 9th Floor, No.1, Nanhai Road, Taipei, 100 Taiwan
Tel: 886-02-23925077
Fax: 886-02-23972573
1. Background
The National Federation of Certified Public Accountant Associations (NFCPAA) was founded on December 25, 1946, in the capital city of Nanking. Its membership comprises all of the local CPA associations. The objectives of NFCPAA are as follows：
‧ enhancing CPAs’ function,
‧ improving CPAs’ system,
‧ contributing to the economic developments,
‧ promoting the international exchanges of study and experience in terms of accounting and auditing,
‧ conspiring to develop CPAs’ career.
In order to facilitate the NFCPAA’s various objectives, the NFCPAA organizes various kinds of committee as follows：
‧ Professional Ethics Committee,
‧ Think Tank Committee,
‧ Professional Education Committee,
‧ International Affairs Committee,
‧ Laws and Regulations Committee,
‧ Public Policy Committee,
‧ Operation Assessment Committee,
‧ Tax Regulations Committee,
‧ Accounting and Auditing Committee,
‧ Professional Service Development Committee，
‧ Provisional committees on special issues.
2. Organizational Structure
At Present, The NFCPAA comprises three group members which are Taiwan Provincial CPA Association, Taipei City CPA Association and Kaohsiung City CPA Association. To serve their individual members, the three local CPA Associations institute several committees, such as Tax Agency Service Committee, Industry and Commerce Service Committee, Accounting and Auditing Committee, Public Welfare and Relations Committee, Association Development Committee, International and Cross-Strait Service Committee, Disciplinary Committee and Financial Accounting Regulations Committee. In addition, all of the local Associations appoint CPAs to serve the general public and Set the service centers in the offices of Ministry of Finance, Minify of Economic Affairs Taipei and Kaohsiung National Tax Administration, National Tax Administration in Northern, Central and Southern Taiwan Province.
Organization Chart of NFCPAA
3. Services rendered by a CPA
In accordance with the CPA Law, a CPA, in the officially registered regions, render the following professional services:
(1) To perform, upon assignment by government agencies or judicial authorities or engagement by a client, services with regard to planning, management, auditing, verification, liquidation, appraisal, financial statement analysis, and evaluation of assets as may be required in connection with accounting.
(2) To perform services related to the examination and certification of financial reports.
(3) To serve as an inspector, liquidator, manager in bankruptcy, or executor of a will, or in any other fiduciary capacity.
(4) To serve as an agent in cases involving taxation.
(5) To serve as an agent in cases in connection with registration of business firms or trademarks, and in other cases relevant to such registration.
(6) To perform services related to other accounting matters.
(7) To serve in the capacity of company inspector. In accordance with the Company Law, the court may select and appoint a certified public accountant to serve as company inspector.
(8) To serve in the capacity of company liquidator. In accordance with the Company Law, the meeting of stockholders or the court may select and appoint a certified public accountant to serve as company liquidator.
(9) To serve in the capacity of bankruptcy manager. In accordance with the Bankruptcy Law, the court can select and appoint a bankruptcy manager, in which position a certified public accountant may serve.
(10) To serve in the capacity of estate executor. In accordance with the Civil Law, a certified public accountant may serve in the position as an estate executor.
(11) To serve other trust individuals, company reorganization supervisors, etc. In accordance with the Company Law and other provisions of the law, certified public accountants may be designated to oversee company reorganization, or may serve as an assisting role in company reorganization or in other trust positions.
The Norm of Mutual Evaluations Conducted by the Asia/Pacific Group on Anti-Money Laundering for Certified Public Accountant （CPA）of the Republic of China
100. In providing the following services, a CPA may audit the client’s account, keep the records, apply the registration, and test the compliance of legal requirements:
(1) transaction of real estate,
(2) custody of monies, securities or other assets,
(3) custody of bank, deposits or security accounts
(4) participating the establishment, operation or management of a company,
(5) participating the establishment, operation or management of legal entity or legal arrangements, and
(6) merger or acquisition.
What measures can be taken in order to prevent money laundering ?
200. The measures that can be taken in preventing money laundering related to the above services provided by a CPA are described as follows:
210. The transaction of real estate:
211. Situation analysis
Audit client / Executing transaction for clients / － 1. It’s not the scope of business of CPAs. The CPA should not accept the engagement.Transaction of real estate / 2. It may affect the independence of CPAs. The CPA should not accept the engagement.
Register & competent authority :
1. Governed by land administration organ.
2. Using the principle of approbation and registration. / Assets included in the financial statements / － The CPA should exam, audit and report in accordance with auditing standards..
Executing transaction for clients / － It’s not the scope of business of CPAs. The CPA should not accept the engagement.
Non-audit client / Transaction consulting / － in accordance with professional judgments
Serving as a bankruptcy trustee or liquidator / － The CPA should carry out the task in accordance with Company Law and Bankruptcy Law.
212. Explanations:
1. Except to serving as a bankruptcy trustee or liquidator, a CPA should not execute the transaction of real estate for a client, as this against the Certified Public Accountant (CPA) Law (Article 15).
2. If the real estate is already a part of financial statements, a CPA should perform the audit and issue the audit report in accordance with Certified Public Accountant Law (Article 8, 16, 19, 22-25), Generally Accepted Auditing Standards (GAAS) and related legal rules. (Please refer to this Norm 300.)
3. The consulting services of real estate transaction for non-audit client:
(1) A CPA should not act as the delegate of the transaction for decision making, because the responsibility of decision making belongs to clients.
(2) A CPA should not purchase the real estate or other property from clients. (Certified Public Accountant Law - Article 22)
(3) The scope of consulting services is normally within the confines of risk evaluation of real estate transaction, asset management, and accounting treatments.
4. Serving as a bankruptcy trustee or liquidator:
(1) A CPA may dispose real estates, distribute cash to creditors and return residual cash to the shareholders.
(2) In carrying the above duty, a CPA should act in accordance with Certified Public Accountant Law, Company Law and Bankruptcy Law.
5. The registration and related services of real estate transaction belongs to “Land Registration Agents” and are not the scope of services of CPAs. In addition, the principle of approbation and registration are adopted in Taiwan, as the basis of real estate management, which is governed by land administration.
6. Related rules and regulations:
(1) Certified Public Accountant Law - Article 8.1, 15, 16, 19, 22, 23, 24 and 25,
(2) Taiwan’s Generally Accepted Auditing Standards (GAAS),
(3) The Bulletin of Norm of Professional Ethics for Certified Public Accountants of the Republic of China – No.1, 5, 8, 10.,
(4) Rules Governing Auditing and Certification of Financial Statements by Certified Public Accountants – No.10 & 17.,
(5) Other regulations for public company:
a. Securities and Exchange Law
b. Guidelines Governing the Preparation of Financial Reports by Public Companies,
c. Regulations for the Establishment of Internal Control Systems by Public Companies,
d. Regulations Governing the Acquisition or Disposition of Assets by Public Companies.
220. Custody of monies, deposits or security accounts:
221. Fundamental Principle
1. Non-public company: a CPA may act as a custodian for such client’s monies as it is not illegal. If there was reason to believe that the monies were obtained illegally, or are to be use for illegal activities, a CPAs should not act as a custodian for such client’s monies.
2. Public company: a CPA should not act as a custodian for a Public Company’s monies.
222. Explanations:
1. A CPA can only act as a custodian for a non-public company’s monies when all the following conditions are met:
(1) as a necessary activity in providing services,
(2) not against the related rules and regulations,
(3) the request of clients,
(4) client’s monies obtained legally and are not to be use for illegal activities.
2. The term “Client’s monies” referred to in this Norm shall be defined as any monies－including bills of exchange, promissory notes, and documents of title which can be converted into money e.g., bearer bonds－received by a CPA to be held or paid out on the instruction of the person from whom or on whose behalf they are received.
3. When a CPA act as a custodian for client’s monies, the following rules or regulations should be abided:
(1) Certified Public Accountant Law - Article 8,
(2) Money Laundering Control Act,
(3) The Bulletin of Norm of Professional Ethics for Certified Public Accountants of the Republic of China – No. 8,
(4) The Securities and Futures Commission, the Financial Supervisory Commission of R.O.C., 83/9/5 TMOF-SEC (6)-No.01797
230. Custody of bank, deposits or security accounts:
The same rules and regulations with Norm 220 should be followed.
240. Services for the establishment, operation or management of a company:
241. Situation analysis
Services for the establishment,, operation or management of a company/ Establishment / Nationals of the ROC or domestic legal entities: the Company Law and Regulations Governing Examination of Capital Registration Applications by Corporations should be followed.
Foreign nationals or overseas Chinese: the Company Law, Statute for Investment by Foreign Nationals and Statute for Investment by Overseas Chinese should be followed.
A branch of foreign company: the Company Law should be followed.
Operation and
Management: the Company Law and Regulations Governing Examination of Annual Report by Corporations should be followed
242. Explanations:
1. When nationals of the ROC or domestic legal entities set up a new company, a CPA may accept their engagements and render services:
(1) The principle of registration is adopted and the rules related to the establishment of a new company are as follows:
a. the Company Law,
b. the Regulations Governing Examination of Capital Registration Applications by Corporations,
c. the Notices of CPAs taking charge of Examination of Capital Registration Applications by Corporations,
(2) Before accepting a client’s engagement for corporate registration, the CPA should acquire a client’s letter of attorney.
(3) The documents of capital registration application include all of founders’ ID copies, shareholders list, letters of consent to act as director/supervisor/board chairman (needing an autograph), the CPA’s audit report of capital payments and registration applications, etc.
(4) The competent authority is Department of Commerce, Ministry of Economic Affairs, R.O.C. or Business Administration Office of a municipal government.
2. When foreign nationals or overseas Chinese set up a new company, a CPA may accept their engagement.
(1) The principle of registration is adopted and the rules related to the establishment of a new company are as follows,
a. the Company Law
b. the Regulations Governing Examination of Capital Registration Applications by Corporations
c. the Notices of CPAs taking charge of Examination of Capital Registration Applications by Corporations
(2) The competent authority is Investment Commission, Ministry of Economic Affairs, R.O.C.
(3) Confirming the investor identity: Foreign nationals should have nationality ID; foreign legal person should have related certificate of establishment for their legal entity.
(4) The documents of registration application include investment plan, ID or certificate, etc. After the Investment Commission’s approval of the investment application, foreign investors can remit monies to their company account as the initial investments.
(5) If foreign nationals or overseas Chinese need remitting monies again as a new investment, they should inform the Investment Commission and engage a CPAs to issue Capital Audit Report.
3. When a branch of foreign company is set up, A CPA may accept the engagement.
(1) The principle of registration is adopted and the rules related to the establishment of a foreign branch are as follows,
a. the Company Law,
b. the Regulations Governing Examination of Capital Registration Applications by Corporations,
c. the Notices of CPAs taking charge of Examination of Capital Registration Applications by Corporations,
(2) Before accepting a client’s engagement for corporate registration, a CPA should acquire a client’s letter of attorney.
(3) A foreign company should have related certificate of establishment for their legal entity and the representative should provide the evidence of ID.
(4) After preparing the above-mentioned documents to apply corporation registration and obtaining the evidence of monies remitting as the initial investment, a CPA may be engaged to issue Capital Audit Report for the establishment of the company..
3. Managing and operating the company:
(1) When the corporate expenditure exceeds some amounts (1 million NT dollars is ruled by Ministry of Economic Affairs), a money order, check, note or other instruments permitted by competent authority should be used and the payee should be recorded.
250. Services in the establishment, operation or management of legal entity or legal arrangements:
The same regulations with Norm 240 should be followed.
300. The CPA’s professional practice in Taiwan and the APG Recommendations:
Taiwan’s government basically uses the principle of registration concerning real estates, monies and capital registrations. We illustrate the relationship between the rules, regulations or standards of CPA’s professional practice and the APG Recommendations, including audit the client’s account, keep the records, apply the registration, and test the compliance of legal requirements.