Chinese Taiwan

Member Organizations

Member Organization Associate Other PAOs

  Federation of CPA Associations of Chinese Taiwan

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    The Taiwan Company Act sets financial reporting requirements for listed companies, private companies, insurance companies, and financial institutions in Chinese Taiwan.

    The Act requires all companies to prepare financial statements in accordance with Republic of China Generally Accepted Accounting Principles (ROC GAAP), which are converged with International Financial Reporting Standards (IFRS). In addition, the Act requires all companies to have their annual financial statements audited following Republic of China Generally Accepted Auditing Standards (ROC GAAS), which are converged with International Standards on Auditing (ISA).

    The Security and Exchange Act sets additional requirements for listed companies, which are regulated by the Securities and Futures Bureau (SFB) of the Financial Supervisory Commission. For listed companies, the requirements of ROC GAAP are supplemented by the Guidelines Governing the Preparation of Financial Reports by Securities Issuers adopted by the SFB. Listed companies must also comply with the Regulations Governing Approval of Certified Public Accountants to Audit and Attest to the Financial Reports of Public Companies issued by the SFB.

    Both ROC GAAP and ROC GAAS are developed by the Accounting Research and Development Foundation (ARDF) under the authority of the SFB.

  • Regulation of Accountancy Profession

    Chinese Taiwan has a shared approach to the regulation of the accountancy profession, giving multiple bodies in the jurisdiction the responsibilities of regulating the profession.

    The Certified Public Accountants Act of 2009 (the Act) establishes the roles and responsibilities for Certified Public Accountants (CPAs) and CPA firms in the jurisdiction. The Act also establishes the roles and responsibilities of the Financial Supervisory Commission (FSC) and the Federation of CPA Associations of Chinese Taiwan (FCPAACT) in the regulation of CPAs and firms.

    Article 12 of the Act establishes the pathways for individuals to become CPAs in Chinese Taiwan. Under the Act, individuals who choose to become CPAs must have a university degree, pass the CPA exam (administered by the Ministry of Education), attain two years of practical experience, and become members of the FCPAACT before applying for a license to practice with the FSC. All CPAs and CPA firms must be members of FCPAACT and licensed with the FSC before being permitted to practice in the profession.

    Although the FSC, as the statutory audit regulator in the jurisdiction, is empowered to oversee auditors, including conducting quality assurance (QA) inspections, and investigating and disciplining auditors and firms that audit listed companies if irregularities arise, it has delegated this responsibility to the Auditing Supervision Division of the Securities and Futures Bureau (SFB). Other responsibilities of the FSC include prescribing regulations for initial professional development (IPD) requirements for CPAs, procedures for registering and licensing CPAs and CPA firms, and for public disclosure of registration materials. In addition, the FSC is responsible for approving national accounting and auditing standards that are developed by the Accounting Research and Development Foundation (ARDF).

    Article 50 of the Act establishes the role and responsibility of the FCPAACT, the only professional accountancy organization (PAO) in Chinese Taiwan. The FCPAACT is a national federation representing four provincial member associations: the Taiwan Provincial CPA Association, Taipei City CPA Association, Taichung City CPA Association, and Kaohsiung CPA Association. According to the Act, the FCPAACT is responsible for maintaining a registry of all CPAs and CPA firms in Chinese Taiwan. The Act establishes the FCPAACT’s responsibilities, including setting continuing professional development (CPD) requirements for CPAs, establishing a quality assurance (QA) and investigative and disciplinary (I&D) systems, and setting a Code of Ethics.

    Chapters 6 and 7 of the Act set out the disciplinary process and sanctions to be administered against CPAs in Chinese Taiwan who have been found guilty of misconduct. The FPCAACT is responsible for investigating all alleged acts of misconduct via its Professional Responsibility Investigation Committee, and the Discipline Committee recommends disciplinary decisions to its Board of Directors for approval. Approved sanctions are then forward to the CPA Discipline Committee that operates under the FSC for final approval. If necessary, this committee is responsible for dealing with appeals by those found guilty.

  • Audit Oversight Arrangements

    The Financial Supervisory Commission (FSC) is entrusted with regulating Certified Public Accountants (CPAs) and CPA firms in Chinese Taiwan. Under the Certified Public Accountant Act of 2009 (the Act), the FSC was established to oversee the functions of the Act, which sets out the roles and responsibilities of all CPAs and CPA firms in Chinese Taiwan. Additionally, the Act establishes the FSC as the statutory audit regulator in Chinese Taiwan, empowered to conduct quality assurance (QA) inspections and investigate and discipline CPAs and CPA firms, with the goal of enhancing the oversight of CPAs and firms and improving the quality of financial reporting—all aimed at safeguarding the public interest. Currently, the FSC delegates the responsibility of overseeing CPAs and CPA firms auditing listed companies to the Accounting and Auditing Supervision Division of the Securities and Futures Bureau.

    The main responsibilities of the FSC include issuing licenses to all CPAs, setting initial professional development requirements for entry into the profession, approving accounting and auditing standards that are developed by the Accounting Research and Development Foundation, the process for investigation and discipline of CPAs and CPA firms who audit listed companies, overseeing the approval of sanctions on all CPAs and CPA firms in Chinese Taiwan who are found guilty of misconduct, and overseeing the supervision of financial reporting or securities registration and requirements.

    The FSC is a member of the International Forum of Independent Audit Regulators (IFIAR).

  • Professional Accountancy Organizations

    Founded in December 1946, the Federation of CPA Associations of Chinese Taiwan (FCPAACT) is the only professional accountancy organization in Chinese Taiwan. The FCPAACT is a national federation representing four provincial member associations: the Taiwan Provincial CPA Association, Taipei City CPA Association, Taichung City CPA Association, and Kaohsiung CPA Association. The objectives of the FCPAACT are to enhance the functions of CPAs, improve the operational abilities of CPAs, contribute to economic development, promote international exchanges of research and experience to the accountancy profession, and to develop the career of CPAs in Chinese Taiwan.

    The role and responsibilities of the FCPAACT are governed under the Certified Public Accountant Act of 2009, and include maintaining a registry of all CPAs and CPA firms, setting continuing professional development requirements, establishing a quality assurance and investigative and disciplinary systems, and prescribing a Code of Ethics. Membership in the FCPAACT is mandatory for all CPAs and CPA firms.

  • Projects or Other Information

    There are currently no ongoing projects.

Adoption of International Standards

  • Quality Assurance

    In Chinese Taiwan, both the Financial Supervisory Commission (FSC) and the Federation of CPA Associations of Chinese Taiwan (FCPAACT) are responsible for quality assurance (QA) reviews of audits by Certified Public Accountants (CPAs) and CPA firms. Only CPAs and CPA firms are allowed to perform audits.

    The FCPAACT’s mandatory QA practice review function is regulated under Article 60 of the Certified Public Accountants Act of 2009 (the Act). The FCPAACT’s responsibility includes the establishment of a Peer Review Committee that conducts QA practice reviews on CPAs and CPA firms registered with the FCPAACT, and it reports that most of the requirements of SMO 1 have been incorporated; however, improvements are needed to ensure that its QA system is linked with the investigative and disciplinary (I&D) system.

    Under Article 19 of the Act, the FSC is responsible for conducting QA inspections on CPA firms that have been approved to audit listed companies in Chinese Taiwan. The FSC has delegated the function of QA inspections to the Accounting and Auditing Supervision Division of the Securities and Futures Bureau (SFB). This process is separate from the FCPAACT process.

    Quality control standards, adopted by both the FCPAACT and FSC, are included in the Republic of China Generally Accepted Auditing Standards (ROC GAAS) under Sections No. 44 and No. 46, and both sections were developed based on ISA 220 and ISQC 1, respectively. ROC GAAS is issued by the Accounting Research and Development Foundation (ARDF).

    Current Status: Partially Adopted

  • International Education Standards

    Initial professional development (ID) and continuing professional development (CPD) requirements in Chinese Taiwan are regulated under the Certified Public Accountants Act of 2009 (the Act). Under this act, the Financial Supervisory Council is responsible for setting IPD requirements for Certified Public Accountants (CPAs), while the Federation of CPA Associations of Chinese Taiwan (FCPAACT) is responsible for setting CPD requirements for CPAs. The CPA exam is administered by the Ministry of Education.

    The FCPAACT reports that, as of 2015, a majority of the IES have been adopted in Chinese Taiwan except for IES 1 and IES 8, which are expected to be adopted by July 2016. The FCPAACT reports that universities set entry requirements for professional accounting education programs; however, the role of universities in this process and FCPAACT’s role in the adoption of IES 1 is unclear.

    Current Status: Partially Adopted

  • International Standards on Auditing

    The Financial Supervisory Commission (FSC) has delegated its responsibility for setting national auditing standards to the Auditing Standards Committee of the Accounting Research and Development Foundation. The law or regulation that authorizes the FSC to set auditing standards is unclear.

    The Taiwan Company Act requires all companies to have their annual financial statements audited following Republic of China Generally Accepted Auditing Standards (ROC GAAS), which is in the process of convergence with ISA.

    Listed companies must comply with the Regulations Governing Approval of Certified Public Accountants to Audit and Attest to the Financial Reports of Public Companies issued by the Securities and Futures of Bureau of the FSC.

    The ARDF also refers to the International Standards on Review Engagements and International Standards on Assurance Engagements when developing ROC GAAS.

    Current Status: Partially Adopted

  • Code of Ethics for Professional Accountants

    Under the Certified Public Accountants Act of 2009, the FCPAACT is responsible for setting ethical requirements for Certified Public Accountants.

    Since 2009, the Federation of CPA Associations of Chinese Taiwan (FCPAACT) has developed a Code of Ethics for its members, and has adopted the 2009 IESBA Code of Ethics by reference except for Part C of the Code. The FCPACCT has been revising its Code as of January 2016 and will use the 2013 IESBA Code of Ethics as a reference during the revision.

    Current Status: Partially Adopted

  • International Public Sector Accounting Standards

    The Directorate General of Budget, Accounting & Statistics of the Executive Yuan has full responsibility to adopt public sector accounting standards in Chinese Taiwan. The current standards are not aligned with IPSAS. The Federation of CPA Associations of Chinese Taiwan reports that, in 2015, to strengthen the quality of accounting in the public sector, the government was reviewing the General Public Accounting System.

    The law or regulation that defines public sector accounting standards in Chinese Taiwan is unclear.

    Current Status: Not Adopted

  • Investigation and Discipline

    Under the Certified Public Accountants Act of 2009 (the Act), both the Federation of CPA Associations of Chinese Taiwan (FCPAACT) and the Financial Supervisory Commission (FSC) are responsible for the investigative and disciplinary system for Certified Public Accountants (CPAs) and CPA firms.

    Chapters 6 and 7 of the Act set out the disciplinary process and sanctions to be administered against CPAs in Chinese Taiwan who have been found guilty of misconduct.

    The FCPAACT is responsible for investigating all alleged acts of misconduct via its Professional Responsibility Investigation Committee, and the Discipline Committee recommends disciplinary actions to its Board of Directors for approval. Approved sanctions are then forwarded to the CPA Discipline Committee that operates under the FSC for final approval and, if necessary, to hear appeals by those found guilty of misconduct. The FCPAACT reports that it has incorporated most of the requirements of SMO 6; however, differences exist.

    The FSC is empowered to investigate and discipline auditors of listed companies, and has delegated this responsibility to the Auditing Supervision Division of the Securities and Futures Bureau.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    Under the authority of the Financial Supervisory Commission (FSC), the Accounting Research and Development Foundation is responsible for setting national accounting standards in Chinese Taiwan. The law or regulation that authorizes the FSC to set accounting standards is unclear.

    The Taiwan Company Act requires all companies to prepare financial statements in accordance with Republic of China Generally Accepted Accounting Principles (ROC GAAP), which are converged with IFRS. For listed companies, the requirements of ROC GAAP are supplemented by the Guidelines Governing the Preparation of Financial Reports by Securities Issuers adopted by the Securities and Futures Bureau of the FSC. Although ROC GAAP was first developed in Chinese Taiwan in alignment with US GAAP, in 2013, the FSC announced plans to converge with IFRS.

    The FSC released a Roadmap for Full Adoption of the Upgraded IFRS, which was to be implemented in two stages. The first stage began in 2015 and requires companies to adopt the 2013 IFRS with no amendments, except for IFRS 9, Financial Instruments. The second stage, starting in 2017, will see all companies in Chinese Taiwan adopting IFRS. IFRS in Chinese Taiwan are translated into Traditional Chinese and are called the Traditional Chinese IFRSs.

    Chinese Taiwan adopted the Enterprise Accounting Standards, which were developed based on the 2013 IFRS for SMEs.

    Current Status: Partially Adopted

Disclaimer

IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.

Methodology

Methodology
Last updated: 02/2016
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