Insights

Writing on China audit, due diligence and reporting

Practical notes on how financial information is built in China, what to test, and what to ask for.

Financial Due Diligence in China: A Four-Part Framework

Due diligence · Series overview

Revenue, related parties, cost of sales and operating expenses — the four areas that decide the number, and the outputs they produce.

Due diligence · Part 1

The three-way reconciliation, channel structure, price realisation, and matching revenue to bank receipts.

Due diligence · Part 2

The four tests — pricing, substance, survival, substitutability — that decide what survives the closing.

Due diligence · Part 3

The margin bridge, purchase price benchmarking, supplier terms, and inventory at cost.

Due diligence · Part 4

The four-way payroll reconciliation, shared costs in both directions, and non-recurring items.

Group audit

The confirmation cycle, inventory counts, cut-off testing and the local filing calendar — where the plan should start.

Reporting

Chinese standards are largely converged with IFRS. What remains is specific, and worth identifying before the consolidation.