The revised Certified Public Accountant Law will go into effect by April 2008, enabling authorities to deal strongly with audit corporations involved in irregularities. It is hoped the revised law will help halt accounting fraud. But it must also be realized that severer administrative action is not the panacea for unlawful accounting.
Before the revision, the law stipulated only three kinds of administrative action against audit corporations — a reprimand, an order to suspend operation, and an order to disband an audit corporation. To enable financial authorities to more flexibly cope with accounting irregularities, three more types of action were added — imposition of a fine, an order to improve operation, and an order prohibiting a CPA involved in irregularities from engaging in the operations and decision-making of the employer audit company.
An audit corporation that deliberately takes part in a client's cooking the books must pay a fine equivalent to 1.5 times the compensation paid by the client. An audit corporation that overlooks the client's deceptive accounting practices through carelessness must pay the same amount as the the compensation paid by the client.