Memorandum of Standards for Auditing Stock IssuanceNo. 15-Guidelines for Auditing Continuous Calculation of Profits and Performance in Recent Three Years
China Securities Regulatory Commission Issuance Supervision Department September 27th, 2002
According to the Company Law, the Interim Regulations on the Administration of Stock Issuance and Trading and other laws and regulations, combined with the audit practice, the audit standards for the continuous calculation of profits and performance of initial public offering companies in the last three years are defined as follows:
1. Auditors should master the following standards when auditing whether the issuer meets the conditions of continuous profitability in the last three years as stipulated in Articles 137 and 152 of the Company Law:
The issuer's net profit before and after deducting non-recurring gains and losses and investment income that cannot be consolidated in the accounting statements is positive. The issuer's business, operating assets and management have not changed much in the last three years, and the issuer's shareholder structure has not changed much in the last year.
Two, auditors in the audit time less than three years, initiated the establishment of a joint stock limited company can continuously calculate the operating results, according to the following standards:
1, the main sponsor is large and medium-sized state-owned enterprises or state-owned institutions that implement enterprise management;
2. The main promoters contribute capital with operating assets with operating performance;
3. The business, assets and management of the issuer have not changed significantly in the last three years.
The shareholder structure of the issuer has not changed much in the past year.
If both the main sponsor and other sponsors contribute capital with operating assets, the operating performance of the main sponsor can be calculated continuously, but the operating performance of other sponsors cannot be calculated continuously.
The issuer shall provide audited financial statements of operating assets invested by other promoters, and provide financial statements including the performance of all promoters as pro forma statements, which shall be disclosed in the prospectus.
As the main sponsor of large and medium-sized state-owned enterprises or state-owned institutions in the fiscal year of continuous calculation of operating performance, the problem of sustained profitability in the last three years must also meet the requirements of the Memorandum of Review on Stock Issuance (No.3).
The main promoters mentioned in these Guidelines refer to the promoters who are the largest shareholders of a joint stock limited company and hold more than 30% of the shares.
Three. Auditors should master the following criteria when auditing whether the issuer whose business opening time is less than three years, the whole limited liability company is changed into a joint stock limited company and the limited liability company has been established for three years can continuously calculate its operating performance:
1. A limited liability company converts the audited net assets on the change base date into shares of a joint stock limited company;
2. The business, assets and management of the issuer have not changed significantly in the last three years, and the shareholder structure of the issuer has not changed significantly in the last year.
Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures and foreign-funded enterprises with legal personality are organized as limited liability companies. If the company is wholly changed to establish a joint stock limited company in accordance with the provisions of the Company Law and the Interim Provisions on Several Issues Concerning the Establishment of Foreign-invested Joint Stock Limited Companies, the provisions of the preceding paragraph shall apply mutatis mutandis.
Four, auditors in the audit opening time less than three years, first set up a limited liability company, and then changed to a joint stock limited company according to law and the limited liability company lasted less than three years, whether the issuer can continue to calculate the operating results, according to the standards of Article 2 of these guidelines.
V. The assets evaluation results calculated by auditors when auditing the accounting treatment of the impact on the going concern performance shall be implemented in accordance with the Standards for Auditing Memorandums of Stock Issuance (No.2).