Chinese Taiwan

The legal and regulatory framework for accounting and auditing in Chinese Taiwan is primarily established under the Securities and Exchange Act (SEA) and the Business Entity Accounting Act (BEAA), which define financial reporting requirements for entities operating in the jurisdiction.

Financial reporting requirements vary depending on the nature and public accountability of entities. Entities whose securities are publicly traded, as well as financial institutions and other specified financial entities, are required to prepare financial statements in accordance with International Financial Reporting Standards (IFRS) as endorsed by the Financial Supervisory Commission (FSC). In certain cases, entities may be permitted to apply IFRS as issued by the International Accounting Standards Board (IASB). These standards are translated and endorsed through a formal due process led by the Accounting Research and Development Foundation (ARDF) under the oversight of the FSC. The endorsed standards, commonly referred to as Traditional Chinese IFRS (TIFRS), may include modifications such as the removal of certain options and differences in effective dates.

Non-public entities are permitted to apply either IFRS as endorsed by the FSC or the Enterprise Accounting Standards (EAS), which are based on the 2013 version of the IFRS for Small and Medium-sized Entities. As a result, a differential reporting framework exists in the jurisdiction, with distinct requirements for publicly accountable entities and other entities.

Statutory audit requirements are established under the Company Act (CA), which mandates audits for entities exceeding specified thresholds related to capital, revenue, or number of employees. Smaller entities below these thresholds may be exempt from mandatory audit requirements. Audits are required to be conducted in accordance with national auditing standards developed by the ARDF and approved by the FSC. These standards, reclassified as Taiwan Standards on Auditing (TWSA), Taiwan Standards on Review Engagements (TWSRE), and Taiwan Standards on Quality Management (TWSQM), are converged with the 2021 International Standards on Auditing (ISA).

Auditors are also required to comply with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, issued by the FSC and the Ministry of Economic Affairs (MOEA), which establish detailed requirements for the conduct of audits in the jurisdiction.

The regulation of the accountancy profession in Chinese Taiwan follows a shared model in which statutory responsibilities are divided among the Financial Supervisory Commission (FSC), the Ministry of Examination (MOEX), and the Federation of CPA Associations of Chinese Taiwan (FCPAACT), operating within the framework of the Certified Public Accountant Act (CPA Act) and related regulations. The profession is regulated at the state level, with the CPA designation serving as the protected professional title for practitioners authorized to provide statutory audit and attestation services.

Entry into the profession is established through the CPA Act and the Senior Professional and Technical Examinations Regulations for Certified Public Accountants. Individuals are required to meet prescribed academic eligibility requirements, pass the national Certified Public Accountant examination administered by the MOEX, obtain a Certified Public Accountant certificate, and complete either pre-professional training or at least two years of experience as an assistant in attestation work at a CPA firm before applying for practice registration. A certificate holder may not practice until joining or establishing a CPA firm, obtaining practice registration from the FSC, and joining a certified public accountants association as a practicing member.

The FSC is the competent authority under the CPA Act and is responsible for the approval, registration, and supervision of certified public accountants and CPA firms. Its oversight responsibilities include practice registration, approval of professional requirements related to continuing professional development, establishment and supervision of auditing and attestation requirements, inspection of firms approved to provide attestation services to public companies, and disciplinary oversight of practitioners. Public company audit oversight is carried out through the FSC’s audit supervision framework, including inspections and disciplinary processes.

The FCPAACT is the sole national professional accountancy organization in Chinese Taiwan and operates as the national federation of local certified public accountants associations. Under the CPA Act, practicing certified public accountants are required to join a certified public accountants association, and the national federation is responsible for drafting continuing professional education requirements for finalization and issuance by the FSC. The FCPAACT also supports professional regulation through ethical requirements, professional guidance, and coordination across the local associations that comprise its membership structure. Public information from the federation indicates that it represents the Taiwan Provincial CPA Association, Taipei CPA Association, Taichung CPA Association, and Kaohsiung CPA Association.

This framework reflects a mandatory membership model for practicing certified public accountants, combined with state oversight of registration, audit regulation, and discipline, and professional body involvement in continuing professional development, ethics, and implementation support.

Independent public oversight of the audit profession in Chinese Taiwan is established under the Certified Public Accountant Act, which designates the Financial Supervisory Commission (FSC) as the competent authority for the regulation and supervision of certified public accountants and certified public accountant firms.

Within this framework, the FSC is responsible for practice registration, approval of certified public accountants to audit and attest to the financial reports of public companies, oversight of auditing and attestation requirements, and the investigation and sanctioning of violations of applicable laws and regulations. The FSC also supervises the development of domestic auditing standards by the Accounting Research and Development Foundation and oversees their alignment with international standards.

In practice, audit oversight of public company auditors is carried out through the Securities and Futures Bureau of the FSC, including its Accounting and Auditing Supervision Division, which conducts inspections and supports enforcement activities relating to certified public accountants and firms that audit public companies.

The FSC is also responsible for approving and registering practicing certified public accountants, establishing relevant continuing professional development requirements, overseeing sanctions imposed on practitioners, and supervising broader financial reporting and securities disclosure requirements in the jurisdiction.

The FSC is a member of the International Forum of Independent Audit Regulators, which supports cross-border cooperation and the exchange of information among independent audit oversight authorities.

Federation of CPA Associations of Chinese Taiwan (FCPAACT)

The Federation of CPA Associations of Chinese Taiwan (FCPAACT) was established in 1946 and is the sole professional accountancy organization in Chinese Taiwan. It operates as a national federation comprising four regional member associations: the Taiwan Provincial CPA Association, Taipei CPA Association, Taichung CPA Association, and Kaohsiung CPA Association.

Membership in a certified public accountants association is mandatory for practicing Certified Public Accountants (CPAs) in the jurisdiction in accordance with the Certified Public Accountant Act (CPA Act). Through this structure, the FCPAACT represents the accountancy profession at the national level and coordinates the activities of its member associations.

The FCPAACT plays a key role in supporting the regulation and development of the profession. Its responsibilities include issuing professional guidance, supporting the implementation of continuing professional development requirements established under the CPA Act, and promoting adherence to ethical standards for CPAs. The FCPAACT also contributes to the development of professional standards and provides input into consultations led by national standard-setting and regulatory bodies.

In addition, the FCPAACT supports the implementation of quality assurance and investigative and disciplinary systems within the profession and facilitates coordination between regional associations and the Financial Supervisory Commission (FSC) on matters related to professional conduct and oversight.

At the international level, the FCPAACT is a member of the International Federation of Accountants and participates in global initiatives to support the adoption and implementation of international standards and best practices.

The quality assurance (QA) review system in Chinese Taiwan is established under the Certified Public Accountant Act, which provides the legal foundation for QA reviews of certified public accountants and certified public accountant firms. Responsibility for the QA system is shared between the Financial Supervisory Commission (FSC) and the Federation of CPA Associations of Chinese Taiwan (FCPAACT).

The FSC is responsible for conducting inspections of certified public accountant firms that audit public interest entities through its audit oversight framework, with inspections carried out by the Accounting and Auditing Supervision Division of the Securities and Futures Bureau. The system applies a risk-based and cycle-based approach. For other firms, the FCPAACT operates a practice review system through its peer review arrangements.

While a QA review system is established and operational across the profession, available information indicates that certain elements of the system, including consistency of review cycles and full alignment with all requirements of SMO 1, are not fully demonstrated for all mandatory audits. Accordingly, the QA review system is assessed as partially aligned with SMO 1.

At the firm level, quality management standards have been adopted as Taiwan Standards on Quality Management (TWSQM), which are based on International Standards on Quality Management 1 and 2. TWSQM 1 and TWSQM 2 are effective for audits of financial statements for periods ending on or after December 31, 2023.

Current Status: Partially Adopted

Initial and continuing professional development requirements for certified public accountants in Chinese Taiwan are established under the Certified Public Accountant Act and related regulations. The Financial Supervisory Commission (FSC) is the competent authority responsible for the overall framework, the Ministry of Examination administers the certified public accountant examination, and universities provide the required academic education.

Entry into the profession requires completion of higher education, passing the national certified public accountant examination, and fulfilling practical experience requirements prior to practice registration. Continuing professional development requirements are prescribed under the Certified Public Accountant Act and implemented through detailed regulations, including mandatory annual continuing professional education hours and ethics-related training requirements.

The framework covers entry requirements, professional education, assessment, practical experience, and continuing professional development for all certified public accountants in the jurisdiction. Available information indicates that these requirements are established at the jurisdiction level and are applied consistently across the profession. Accordingly, the requirements are assessed as aligned with the International Education Standards in effect as of the time of the assessment.

Current Status: Adopted

Under the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, the Financial Supervisory Commission (FSC) is responsible for establishing auditing standards in Chinese Taiwan and has delegated standard-setting to the Accounting Research and Development Foundation (ARDF). The Taiwan Standards on Auditing (TWSA) are the national auditing standards applied in the jurisdiction.

The current framework is based on the 2021 International Standards on Auditing (ISA). Publicly available sources indicate that the Republic of China Generally Accepted Auditing Standards, reclassified as TWSA from December 2022, are converged with the 2021 ISA. The ARDF also maintains related pronouncements on review, assurance, and quality management, and continues to issue revised Taiwan standards, including ISA-based revisions issued in October 2022.

ISA for LCE has not been adopted or permitted for use in Chinese Taiwan. Audits of less complex entities continue to be conducted under the Taiwan Standards on Auditing (TWSA), which are based on the 2021 ISA framework.

Current Status: Partially Adopted

Ethical requirements for certified public accountants in Chinese Taiwan are established under the Certified Public Accountant Act. The Act requires the National Federation of Certified Public Accountants Associations of the R.O.C. to draft continuing professional education requirements and provides the legal basis for the profession’s self-regulatory framework, while the Financial Supervisory Commission (FSC) remains the competent authority.

In practice, the Federation of CPA Associations of Chinese Taiwan (FCPAACT) issues the national Code of Professional Ethics pronouncements for certified public accountants. Publicly available pronouncements indicate that the code has been revised with reference to the 2018 International Code of Ethics for Professional Accountants (including International Independence Standards) and that subsequent updates were issued in 2022 and 2023. Accordingly, the International Code of Ethics for Professional Accountants (including International Independence Standards) is assessed as Partially Adopted.

Current Status: Partially Adopted

Public sector accounting requirements in Chinese Taiwan are established under the Accounting Act and related government accounting regulations issued by the Directorate General of Budget, Accounting and Statistics (DGBAS) of the Executive Yuan. DGBAS is responsible for developing the public sector accounting framework applied by government entities.

The current framework is based on national governmental accounting requirements, including the revised Governmental Accounting Concepts Statements and Governmental Accounting Pronouncement issued in 2019. Available authoritative and professional sources indicate that these pronouncements refer to International Public Sector Accounting Standards (IPSAS) and reflect accrual-based accounting for most government activities, while treasury-related activities continue to follow a cash basis. However, IPSAS have not been adopted directly as the applicable accounting standards for all public sector entities. Accordingly, IPSAS are assessed as Partially Adopted.

Current Status: Partially Adopted

The investigative and disciplinary (I&D) system in Chinese Taiwan is established under the Certified Public Accountant Act, which provides the legal foundation for investigation, discipline, and appeals for certified public accountants and certified public accountant firms. Responsibility for the system is shared between the Financial Supervisory Commission (FSC) and the Federation of CPA Associations of Chinese Taiwan (FCPAACT).

The FCPAACT is responsible for investigating alleged misconduct through its internal committees, including the Professional Responsibility Investigation Committee and the Discipline Committee, and for recommending disciplinary actions. The FSC, as the competent authority, is responsible for final disciplinary decisions, including the approval of sanctions and oversight of the disciplinary process. The FSC also has authority to impose sanctions on auditors of public interest entities, including in cases related to quality assurance findings and non-compliance with continuing professional development requirements. The disciplinary framework and sanctions are set out in Chapters 6 and 7 of the Certified Public Accountant Act.

A formal I&D system is therefore established and operational across the profession, covering investigation, discipline, and appeal mechanisms. However, available information indicates that certain elements of the system do not fully demonstrate alignment with all requirements of SMO 6, including aspects related to transparency of outcomes, timeliness of case resolution, and independent review processes. Accordingly, the I&D system is assessed as Partially Adopted.

Current Status: Partially Adopted

Under the Securities and Exchange Act, the Financial Supervisory Commission (FSC) is responsible for endorsing accounting standards for public companies in Chinese Taiwan, while the Accounting Research and Development Foundation (ARDF) translates and reviews International Financial Reporting Standards (IFRS) and related interpretations for endorsement. The endorsed standards are referred to as Traditional Chinese IFRS (TIFRS) (see ARDF’s TIFRS Comparison Tables.

Chinese Taiwan applies an endorsement approach under which newly issued IFRS Accounting Standards are endorsed by the FSC on a standard-by-standard basis for application by public companies. Publicly accountable entities, including listed companies and regulated financial institutions, are required to apply TIFRS, while non-public entities may apply either TIFRS or the Enterprise Accounting Standards.

However, available authoritative sources indicate that TIFRS may differ from IFRS Accounting Standards as issued by the International Accounting Standards Board due to endorsement timing and possible differences in effective dates or permitted options. In addition, the ARDF’s published comparison tables continue to present TIFRS and IFRS side by side by year, indicating an ongoing endorsement process rather than automatic application of IFRS in effect as of the time of the assessment.

Accordingly, although IFRS Accounting Standards are required for domestic publicly accountable entities, the jurisdiction does not demonstrate application of IFRS Accounting Standards in effect as of the time of the assessment for all such entities. Accordingly, IFRS Accounting Standards are assessed as Partially Adopted.

Current Status: Partially Adopted

Relevant Organizations

Accounting Research and Development Foundation (ARDF)Directorate General of Budget, Accounting and Statistics (DGBAS)Financial Supervisory Commission (FSC)Federation of CPA Associations of Chinese Taiwan (FCPAACT)International Forum of Independent Audit Regulators (IFIAR)Ministry of Examination (MOEX)

Relevant Legislation

Certified Public Accountant Act Company Act Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants Securities and Exchange Act

Relevant Publications

IFRS Foundation Jurisdictional Profile – Chinese Taiwan Taiwan Standards on Quality Management (TWSQM 1 and TWSQM 2)Taiwan Standards on Auditing (TWSA) and related pronouncements