Core Viewpoint - The revised "Management Measures for the Record-Filing of Accounting Firms Engaging in Securities Services" aims to enhance the supervision and quality management of accounting firms in the securities sector, addressing issues of competency and quality in their services to better support capital market development [1][2]. Group 1: Key Aspects of the Revised Measures - The measures include improved record-filing requirements that emphasize the importance of quality management and professional responsibility for accounting firms [2]. - A comprehensive regulatory framework is established to ensure ongoing compliance with record-filing requirements, including processes for cancellation and rectification [2]. - Coordination with existing laws and regulations, such as the "Certified Public Accountant Law" and the "Securities Law," has been enhanced to streamline the record-filing process [2]. Group 2: Implementation and Support - The Ministry of Finance and the China Securities Regulatory Commission will focus on the effective implementation of the revised measures, providing guidance to accounting firms for better understanding and execution [3]. - Improvements to the record-filing platform will facilitate information sharing and ease the operational process for accounting firms [3]. - A collaborative approach will be adopted for regulatory activities, utilizing both on-site and off-site methods to manage record-filing verification and announcements [3].

Group 1 - The Ministry of Finance's Accounting Department announced the voluntary deregistration of securities service business by Beijing Yatai International Accounting Firm and Zhongtianyun Accounting Firm, reflecting the challenges and strategic adjustments in the auditing industry under strong regulatory conditions [1] - Zhongtianyun had actively expanded its business in the capital market, conducting audits for 8 listed companies in the 2024 annual report audit, indicating a significant shift in the firm's strategy [1] - The auditing industry has faced immense pressure due to hundreds of penalties imposed by regulatory bodies on various accounting firms, highlighting the risks associated with audit failures and the potential civil liabilities from investor lawsuits [1] Group 2 - The implementation of the revised Accounting Law on July 1, 2024, significantly increases the accountability and penalties for accounting violations, creating a more challenging environment for accounting firms [2] - The risk-reward balance for accounting firms engaged in securities services has become severely skewed, with increased operational costs and heightened risks of violations leading to uncertain potential losses [2] - The shift in attitude from "competing for business" to "voluntarily exiting" the securities service sector reflects the changing dynamics within the industry, necessitating firms to enhance their auditing skills and independence to navigate the complex auditing landscape [2]

Core Viewpoint - The revised "Management Measures for the Record-Filing of Accounting Firms Engaging in Securities Services" marks the first amendment since its initial release in July 2020, transitioning from approval management to record-filing management, significantly increasing the number of qualified accounting firms from 40 to over 100 [1][3]. Group 1: Key Changes in the Revised Measures - The revised measures emphasize the situation of partners and registered accountants, requiring more specific reporting on their status during the record-filing process [3][4]. - The requirement for separate record-filing for significant changes in internal integrated management and quality management systems has been removed, potentially encouraging firms to enhance their integrated management [4][5]. - The provision for automatic cancellation of record-filing for firms that do not engage in securities auditing for a complete natural year after initial filing has been eliminated, streamlining the process and improving efficiency [6][9]. Group 2: Enhanced Regulatory Framework - The revised measures introduce a requirement for firms that have been suspended from business or securities services to rectify issues promptly, with the Ministry of Finance and the China Securities Regulatory Commission (CSRC) listing them as abnormal institutions during the suspension period [6][7]. - A comprehensive regulatory framework has been established, enhancing oversight of the entire process for accounting firms engaging in securities services, including annual record-filing and management processes [9][10]. - The measures stress the importance of internal integrated management norms, requiring firms to have robust systems in place covering personnel, financial, business management, technical standards, and information technology [11][12]. Group 3: Implications for Smaller Firms - The emphasis on internal integrated management may significantly reduce the chances of smaller accounting firms successfully filing for securities services, potentially leading to a gradual exit of less capable small firms from the market [2][12].