China’s revised Measures on the Administration of Accounting Records came into effect on 1 January 2016 with a view to improving the administration of accounting records. Companies are encouraged to use information technology solutions to manage accounting records, and may keep electronic accounting records if certain conditions are satisfied that ensure the accuracy, reliability and completeness of the accounting records. Additionally, longer retention of certain accounting records is now required. Highlights of the new accounting measures appear below.
1. Longer retention periods for accounting records
Minimum retention periods for various accounting vouchers, accounts, books, financial reports and other accounting documents have been extended to either 10 years or 30 years:
- Original vouchers and bookkeeping vouchers – increased from 15 years to 30 years
- Ledgers and journals – increased from 15 years to 30 years
- Other accounts books – increased from 15 years to 30 years
- Monthly, quarterly and half-yearly financial reports – increased from 3 years to 10 years
- Bank statements – increased from 5 years to 10 years
- List of submitted accounting records – increased from 15 years to 30 years
The requirement for permanent retention of certain key accounting records has not changed:
- Annual financial accounting reports
- List of handover accounting records
- List of retained accounting records
- Accounting records evaluation opinion (added to the list)
2. Accounting records may be stored solely in electronic form
Under the new accounting measures, companies are encouraged to use information technologies such as computers and network communication systems to manage accounting records. Companies may generate and store accounting records exclusively by electronic means, provided that they meet certain criteria. The records must be derived from a true and valid source, and be generated and transmitted through an electronic device. A company’s accounting records management system must be able to receive and read electronic accounting records accurately and effectively, and be able to satisfy long-term retention requirements. There must be effective measures and backups in place to guard against tampering, natural disasters, accidents or wilful damage. Finally, accounting records may not be stored exclusively through electronic means if there is a legal obligation to retain these records permanently or they possess significant preservation value.
3. Obligation to keep track of destroyed accounting records
Companies must maintain a detailed list of all accounting records that have been destroyed including file names, file numbers, the accounting period, and the date and time of destruction. The head of the accounting department, the head of the records management department, and any staff members directly overseeing the destruction process must sign this list.
Contributors – Ian Attema and Nadia Rauf