Financial Reporting

Professional Accounting and Business Support Services

In a rapidly changing business environment, accurate, transparent, and compliant financial management is central to a company’s healthy development.

Morningstar Asia (MSMC ASIA) is committed to providing businesses with a one-stop professional service from accounting and tax to human resources and visa management, helping you operate efficiently and compliantly. The core financial reporting and compliance requirements for foreign-invested enterprises in mainland China include:

Mandatory application of Chinese Accounting Standards (CAS)

All foreign-invested enterprises established in China must adopt Chinese Accounting Standards (CAS) to set up accounting subjects and prepare financial statements. Although CAS has converged with International Financial Reporting Standards (IFRS) on many core principles, some differences remain regarding related party disclosures, reversals of asset impairment provisions, and certain specific measurement methods. Enterprises cannot directly use their overseas parent company’s IFRS or US GAAP to replace Chinese standards for statutory reporting in China.

Statutory accounting year and functional currency

Accounting Year: China adopts a rigid calendar year system, with January 1st to December 31st of the Gregorian calendar constituting a legally mandated accounting year. Companies are not allowed to define their own fiscal years (e.g., from April to March of the following year) as in some countries (such as Japan and Australia).
Functional Currency: In principle, the functional currency should be Renminbi (RMB). If the vast majority of a foreign-invested enterprise’s daily income and expenses are in a foreign currency (such as US dollars), it may choose that foreign currency as its functional currency for daily accounting and settlement; however, it must be converted into Renminbi when preparing statutory financial statements at the end of the period.

Accounting records and language requirements

According to the Accounting Law, all accounting vouchers, accounting books, and financial accounting reports of enterprises must be in Chinese. Foreign-invested enterprises may, based on their internal management needs, use a foreign language in addition to Chinese (such as a bilingual Chinese-English accounting system).
The accounting software used by enterprises must comply with the relevant standards of the Ministry of Finance of China and support Chinese export. Financial data must be stored on servers located within China to meet data security and tax audit requirements.

Statutory Audit

Before the annual corporate income tax settlement (usually before May 31 of the following year) and the annual corporate disclosure, foreign-invested enterprises must engage an independent accounting firm (CPA) in China to conduct a statutory audit of their annual financial statements and issue an audit report in Chinese. This audited financial statement is a mandatory prerequisite for the enterprise to legally remit profits (dividends) to its overseas parent company.

Joint Annual Report Public Announcement

Since 2014, China has abolished the traditional annual inspection system for enterprises and replaced it with an annual report disclosure system. Foreign-invested enterprises must submit a comprehensive report for the previous year (including basic financial information, social security payment information, and special information for foreign-invested enterprises) to multiple departments such as market supervision and administration, taxation, customs, and foreign exchange management through the National Enterprise Credit Information Publicity System between January 1 and June 30 each year.

Why Us?

We uphold the highest standards of accuracy, transparency, and compliance, ensuring every report is auditable. Leveraging our deep understanding of major accounting standards, our team employs tailored and rigorous methodologies to meet your business needs. Through precise reporting and expert insights, we help you identify potential risks, make informed decisions, and earn the trust of stakeholders.

MSMC ASIA

#19-06 160 Robinson Rd, SBF Center, Singapore 068914