The April issue of "China Briefing" focuses on financial management practices, with a particular emphasis on issues related to the financial management of Chinese companies listed on US stock exchanges. Key topics include:
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Financial Fraud in US IPOs of Chinese Companies: The issue highlights the growing concern over financial fraud in Initial Public Offerings (IPOs) by Chinese companies on US markets. It specifically mentions the case of China MediaExpress Holdings (CMEC), where Deloitte, one of the world's four largest auditing firms, abruptly resigned as auditor following serious criticisms of the company's management and practices.
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Better Financial Due Diligence: The need for enhanced financial due diligence is emphasized, particularly for investors in Chinese companies. This includes thorough checks on the legitimacy and transparency of financial operations.
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PRC GAAP, Fapiao, and Sound Financial Management: The article discusses the application of Chinese accounting standards (PRC GAAP) and the use of 'fapiao' (invoice) systems in financial management. It stresses the importance of sound financial practices in the context of Chinese business operations.
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Common Inaccuracies in Chinese Balance Sheets: Insights into common inaccuracies found in Chinese balance sheets are provided, which can affect the reliability of financial reporting and investor decision-making.
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The China Tax Guide: New Updates: Updates on Chinese taxation laws are discussed, providing guidance for businesses navigating the complex tax landscape in China.
The report underscores the challenges faced by Chinese companies seeking to list on US markets, including the potential for financial irregularities and the necessity of rigorous due diligence processes to ensure transparency and compliance. It also highlights the role of professional services like Dezan Shira & Associates in providing guidance on legislation, fiscal matters, and investment strategies in China.
