1. The original announcement "Verifying the authenticity and legality of the paid-in capital (share capital) of the audited entity and its related assets and liabilities" was amended as: "Verifying the authenticity and legality of the paid-in or change of the registered capital of the audited entity." Compared with the definition before revision, on the one hand, it increases the content of capital verification, on the other hand, it further clarifies the specific content of capital verification, which reflects the requirements of relevant laws and regulations for certified public accountants' capital verification. Although the original definition of capital verification is more scientific and rigorous from the accounting point of view, it is only applicable on the premise that the audited entity has established accounting books and made relevant accounting treatment for capital verification matters. In fact, when most domestic-funded enterprises set up capital verification, because the enterprises have not yet been established, they can't set up accounting books to calculate the investment funds paid by investors. In this case, it is difficult to ask certified public accountants to check the paid-in capital and related assets and liabilities of the audited entity in practice. Moreover, users of the capital verification report don't care whether the subject of capital verification has handled the capital verification, but they care whether the investor's capital contribution is in place and whether the capital contribution behavior is true. As can be seen from the revision of the capital verification content, the original announcement is based on the audit theory of accounting statements, and this revised draft has made a breakthrough in this respect.

2. The purpose of capital verification is defined as: "to verify the authenticity and legality of the paid-in registered capital of the audited entity and express verification opinions." In the feedback we collected, there are two different views on this issue. One view is that "authenticity and legality" should be deleted or limited. The main reason is that due to the inherent limitations of capital verification and the limited authority of certified public accountants, it is limited and conditional for certified public accountants to verify and express their opinions on the authenticity and legality of the paid-in or change of registered capital of the audited entity, that is, they must be based on the true, legal and complete capital verification information provided by the audited entity and its investors. In addition, some judgments on the legality of investors' investment have exceeded the professional ability of certified public accountants. Because the so-called legality refers to whether the investor's investment behavior conforms to the Company Law, the Sino-foreign Joint Venture Law, the Sino-foreign Joint Venture Law, the Foreign-funded Enterprise Law and the relevant laws and regulations on enterprise registration management, it is often difficult to judge whether the investor's investment source and investment ability are legal certified public accountants.

Another view is that we should adhere to the formulation of "authenticity and legality" for the following reasons: First, authenticity has been stipulated in relevant national laws and regulations. For example, Article 34 of the Detailed Rules for the Implementation of the Regulations on the Registration of Enterprise Legal Persons (Order No.66 of the State Administration for Industry and Commerce) clearly stipulates that "a capital verification certificate is a document issued by an accounting firm or an audit firm with capital verification qualifications to prove the authenticity of funds". Second, the enterprise needs a certified public accountant to verify the authenticity and legality of the paid-in or change of the registered capital of the audited entity and issue a capital verification report. If the certified public accountant does not verify the authenticity and legality of the paid-in or change of the registered capital of the audited entity, it will not meet the requirements of the users of the capital verification report, and the capital verification will lose its value and significance. Therefore, the formulation of "authenticity and legality" is still retained in the revision of this draft. Of course, due to the limitation of CPA's professional ability and authority, the capital verification report issued by CPA can't provide absolute guarantee for "authenticity and legality". This has a certain gap with the expectations of users of capital verification reports and the public for certified public accountants.

3. Two types of capital verification business are clearly distinguished, and the division method and specific content of establishing capital verification and changing capital verification are stipulated. According to the provisions of the revised draft, the establishment of capital verification and the change of the type of capital verification depend on the type of the unit to be verified when applying for registration with the enterprise registration authority. The provisions on establishing capital verification and changing the contents of capital verification mainly refer to the relevant contents of the Interim Provisions on the Administration of Registration of Registered Capital of Companies (Order No.44 of the State Administration for Industry and Commerce).

(3) The definition of the audited entity

In Article 3 of this revised draft, the original "enterprises and institutions newly established in People's Republic of China (PRC) and carrying out capital verification according to law" is amended as "enterprises established or to be established in People's Republic of China (PRC) and carrying out capital verification according to law". This revision mainly takes into account the original intention of "newly established enterprises and institutions that implement enterprise management" and is only for the establishment of capital verification. As the revised draft adds the content of changing capital verification to the definition of capital verification, the definition of the audited entity needs to be revised accordingly. It should be noted that the capital verification business of economic organizations other than enterprises is listed in the Supplementary Provisions as other capital verification business in this revised draft.

(4) Responsibility for capital verification

In recent years, lawsuits about capital verification have occurred constantly, all involving related liability issues. Especially for the understanding of Article 4 of the original announcement, "Authenticity and legality of capital verification report", people inside and outside the industry have great differences. Although Article 4 of the original announcement clearly stated the authenticity and legality of the capital verification report, it was not recognized by the legal profession, the public and relevant regulatory agencies. They believe that certified public accountants are responsible for the authenticity of the capital verification report, that is, the content and conclusion of the capital verification report are completely consistent with the actual situation. In fact, if investors maliciously cheat or collude with relevant institutions and personnel to provide false certification materials that certified public accountants can't identify, even if certified public accountants perform capital verification business with due care, they may draw inappropriate capital verification conclusions, resulting in the published capital verification conclusions inconsistent with the actual situation. In this case, it is unfair to ask certified public accountants to take responsibility for their verification conclusions. Therefore, there are certain conditions for certified public accountants to express their opinions on "authenticity and legality", and certified public accountants can only reasonably ensure that the verification conclusions are consistent with the facts. In order to avoid misunderstanding or high expectation of CPA's responsibilities from all walks of life, and to be in line with international practice, we deleted Article 4 of the original announcement, added Articles 4 and 5 in the revised draft, further clarified the respective responsibilities of the audited entity, its investors and CPA, and emphasized the role of capital verification report and the concept of "reasonable assurance" in Article 17.

(5) Concern about errors, fraud and violation of laws and regulations.

At present, there are more and more lawsuits faced by certified public accountants in capital verification, and it is very common for investors to cheat in capital contribution, and the risk of capital verification is increasing day by day. In view of this situation, article 6 is added to the revised draft, which emphasizes the importance of maintaining professional prudence, and requires certified public accountants to pay full attention to the mistakes, frauds and violations of laws and regulations of the audited entity when carrying out capital verification business, so as to improve the quality of capital verification business and avoid capital verification risks.

(6) About the scope of verification

The provisions of the original announcement on the scope of capital verification are inconsistent with the requirements of the State Administration for Industry and Commerce, especially the scope of capital verification has not been clearly changed, and there are different practices in practice due to the lack of unified norms. In order to define the scope of capital verification more accurately and concretely, this revised draft has greatly revised the original provisions, mainly according to the requirements of relevant laws and regulations, the needs of capital verification practice and the definition of capital verification, respectively, according to the establishment and change of capital verification (Articles 10 and 11 of the revised draft).

(7) About verification procedures.

Considering the requirements of relevant laws and regulations and the high risk of capital verification business, this revision has strictly implemented some capital verification procedures, revised and supplemented the provisions that are not clear enough or conflict with relevant laws and regulations (Article 12 of the revised draft), deleted the contents of Article 12 of the original announcement, and added some basic principles and necessary procedures. For example, for the verification of monetary contribution, the necessary procedures for bank confirmation have been added. This provision mainly considers the implementation of the bank confirmation procedure, which is helpful to discover the fraud of the audited entity and is necessary to avoid risks. This provision was not made in the original announcement, because it was difficult for certified public accountants to carry out bank confirmation procedures under the economic and legal environment at that time. 1999 1 The Ministry of Finance and the People's Bank of China jointly issued the Notice on Doing a Good Job in Confirmation of Corporate Bank Deposits, Loans and Current Accounts (Caixie Zi [1999]No. 1), and the obstacles to the implementation of this procedure have been basically eliminated. Therefore, in this revision, we have added. For the contribution in kind, the original announcement did not specify that it must be evaluated or appraised, which is inconsistent with the provisions of the Company Law and other relevant laws and regulations, and many problems have been encountered in its implementation. Therefore, the revised draft clearly stipulates that the value of physical objects should be verified on the basis of asset evaluation or value appraisal in accordance with relevant state regulations. The same is true for the verification of intangible assets.

The revised draft supplements the relevant verification procedures and basic requirements in view of the fact that the original announcement is not standardized but there are a large number of net assets converted into paid-in capital (share capital), capital reserve, surplus reserve, undistributed profits and debts in practice. Transfer of capital, or change of registered capital due to merger or division.

(VIII) About the mode of capital contribution

There are only five ways of capital contribution stipulated in the company law: currency, physical objects, industrial property rights, non-patented technology and land use rights. However, due to the development of market economy, the diversification of enterprise organization and operation forms, and the increasing frequency of reorganization, merger and division, some new ways of capital contribution have emerged, such as investors' net assets, creditor's rights and long-term equity investment, which have appeared in large numbers in practice. Although some departmental rules have specific provisions on the new mode of capital contribution, it is not appropriate to make specific provisions in this revised draft when there is no provision in the Company Law, otherwise there will be contradictions inconsistent with the Company Law.

(nine) on the transfer of property rights of physical and intangible assets.

The Company Law stipulates: "If the investment is made in kind, industrial property rights, non-patented technology or land use rights, the transfer procedures of property rights shall be handled according to law." However, when a domestic-funded enterprise is established, it applies for registration and obtains a business license after capital verification, so it is impossible to complete the relevant formalities of property right transfer during capital verification, and the relevant state regulations also allow it to go through the relevant formalities within a certain period after its establishment. Therefore, Article 13 is added to the revised draft, requiring certified public accountants to obtain relevant letters of commitment and disclose them in the capital verification report.

(X) About the function of capital verification report

Due to the increasing number of capital verification lawsuits in recent years, the abuse of capital verification reports has become more and more serious, and the CPA industry, the public, the legal profession and relevant regulatory authorities have different understandings of the role of capital verification reports. 1July, 1999, the Ministry of Finance issued the Notice on Defining the Function of Certified Public Accountants' Capital Verification Report (Caixie Zi [1999]No. 102). Therefore, the second paragraph of Article 17 is added to this revised draft, which specifically regulates related issues and emphasizes the timeliness and pertinence of capital verification reports.

(eleven) about the content and format of the capital verification report.

The main modification of the revised draft in terms of the contents of the capital verification report is to increase the functions and responsibilities of the capital verification report (Article 17 of the revised draft). This revision is based on the following considerations: First, the preparation of the report of audit business with special purpose of capital verification should comply with the provisions of Independent Auditing Practice Announcement No.6-Audit Report of Special Purpose Business, and certified public accountants should explain the purpose of capital verification and the restrictions on distribution and use in the report, which is also in line with relevant international practices. Second, the improper use of capital verification reports is very common at present, and it is necessary to clarify its role and responsibility in capital verification reports.

With regard to the contents of the opinion part of the capital verification report, this revised draft has been greatly revised, respectively standardizing the establishment and change of the opinion part of the capital verification report, and making provisions on the capital verification by installment (Article 19 of the revised draft).

The revised draft also made necessary changes to the contents of the annex to the capital verification report. Mainly consider the actual needs of capital verification business, especially the requirements of users of capital verification reports.