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Issue 175 July 2017

From Dezan Shira & Associates

Internal Control in China

P.04 Internal Control for Business in China P.11 Internal Control for Day-to-Day

P.07 Internal Control Review: Audit and P.14 Using ERP Systems to Improve the
Evaluation Internal Control of Your Business
Introduction Years


Dezan Shira & Associates
Beijing Office
Experienced investors in China have invariably encountered instances of fraud. In 2016
alone, Chinas fraud market was worth an estimated RMB 100 billion about US$14.8 billion
according to government statistics.

However, while fraud is a well-known issue for foreign investors doing business in China, many
companies underestimate the risks of fraud occurring from within their own organizations.
Cultural differences and language barriers frequently cause misunderstandings and lapses in
operational protocols, especially when senior managers are based overseas. Other times, the
threats are more malicious, with opportunistic employees taking advantage of an unstructured
business environment for their own gain.
China Briefing and related titles are
The answer to limiting exposure to these risks is internal control. Internal controls are processes produced by Asia Briefing Ltd., a wholly
implemented by an organization to limit the potential for mismanagement and increase owned subsidiary of Dezan Shira Group.

operational efficiency. These processes range from checks and balances to ensure no single Content is provided by
employee has too much authority within a company, to establishing best practices for business Dezan Shira & Associates. No liability
may be accepted for any of the contents
activities at all levels of an organization.
of this publication. Readers are strongly
advised to seek professional advice when
In this issue of China Briefing magazine, we provide foreign investors with best practices for actively looking to implement suggestions
implementing internal controls in China. We explain what makes Chinas internal control made within this publication.

environment distinct, and why China-based operations need to prioritize internal control. For queries regarding the content of
We then outline how to execute an internal control review to gauge organizational resiliency this magazine, please contact:
and identify gaps in control points, and introduce practical internal controls for day-to-day
operations. Finally, we explore why ERP systems are becoming increasingly integral to All materials and contents
companies internal control regimes. 2017 Asia Briefing Ltd.

Asia Briefing Ltd.,

This magazine is based on over 25 years of experience introducing foreign investors to Chinas Unit 507, 5/F, Chinachem Golden Plaza
unique business environment. We hope this issue of China Briefing prepares your companys 77 Mody Road, Tsim Sha Tsui East
Kowloon, Hong Kong
China operations to run smoothly and successfully.

With kind regards,

Publisher / Alberto Vettoretti
Managing Editor / Adam Pitman
Editors / Zhou Qian, Alexander Chipman Koty,
Jake Liddle
Sabrina Zhang Design / Ly Dang, Jessica Huang

Table of Contents

Internal Control for Business in China

Internal Control Review: Audit and Evaluation

Internal Control for Day-to-Day Operations

This Issues Topic Using ERP Systems to Improve the Internal
Internal Control in China Control of Your Business

Online Resources from China Briefing Annual Subscription

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China Issues Legislation for Internal Control Framework

Internal Control and Anti-Corruption Regulations in China This publication is available as an interactive
PDF and ePublication with additional clickable
Internal Control and Fraud Prevention in China
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Strategic Advisory & Commentary

Online Resources on Emerging Asia
Professional Services
How are internal control and internal audit defined in China?

The Philippines Resumes Tax Audits Following Internal Review Regulatory Framework & Updates

Internal Audit in India: A Proactive Initiative

Legal, Tax, Accounting News
Tax, Accounting and Audit in Vietnam 2016 (2nd Edition)

Cross Region Comparisons

Industry Studies

Magazines, Guides, Reports

This Months Cover Art from Wan Fung Art Gallery

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China Briefing Issue 175 July 2017

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