The revised "Announcement No. 1 of Independent Audit Practice - Capital Verification" (hereinafter referred to as the "Announcement") and the "Guidelines for the Professional Standards of Certified Public Accountants in China No. 3 - Capital Verification (Trial Implementation)" have been implemented for over a year. During the capital verification process, the author has found that some certified public accountants are prone to fall into two major misconceptions:
Misconception One: In change capital verification, some certified public accountants believe that they only need to verify the increase or decrease in registered capital for this period and issue a report, thus the corresponding responsibility they bear is also limited to the increase or decrease amount of this period.
Since Article 11 of the revised Announcement points out: "The scope of verification for change capital verification generally should be limited to matters related to the increase or decrease of the audited entity's registered capital and paid-in capital (share capital). When increasing registered capital, the scope of verification includes aspects related to the increase in capital such as contributors, contribution amounts, contribution methods, contribution ratios, contribution periods, contribution currencies, and related accounting treatments." Some certified public accountants then think that this is set up to reduce the risks for certified public accountants: the smaller the scope of verification, the smaller the scope of verification opinions, and accordingly, the smaller the responsibilities they bear. Especially Article 20: "If contributors pay the registered capital in installments, certified public accountants only need to express verification opinions on the actual receipt of registered capital for this period." This seems to remind certified public accountants even more that in change capital verification, certified public accountants are only responsible for the actual receipt of registered capital for the current period.