Understanding the CNAO2 Audit File

China National Audit Office (CNAO) is the government entity in charge of auditing functions for all state-owned enterprises and public sectors; it periodically audits the financial statements and accounting data for compliance with accounting software standards. CNAO conducts a certification process for accounting software suppliers through China Electronics Standardization Institute (CESI), which verifies the interface standards in addition to the completeness and correctness of output data. CESI grants certification to software suppliers who have complied satisfactorily with all the specified requirements on an annual basis.

As an accounting software supplier, Oracle's PeopleSoft applications must support customers in China by meeting this legislative requirement and obtaining CESI certification. Oracle's PeopleSoft products must provide the required standardized interface functionality and meet specific report requirements.

The new accounting audit file standard (China Accounting Software Data Interface Standard), referred to as CNAO Version 2 or CNAO2, applies to the following segments in China:

  • State-owned enterprises

  • Public sector

  • Government ministries

  • State-owned commercial banks

The new standard mandates the filing format, expands the scope of required filing information, and requires organizations to file their financial and accounting information.

During a CNAO2 audit, state-owned enterprises and public sector organizations export their financial statements and accounting data into XML reports.

PeopleSoft enables businesses in China to create five specific audit files that enable them to meet the required standards. Chinese state-owned enterprises must provide the following audit files according to the CNAO2 standard:

  • Shared: Information is gathered from GL, AR/AP, Fixed Assets, and Payroll.

  • General Ledger: Information is owned by GL.

  • Receivables and Payables: Information is gathered from both AR and AP.

  • Payroll: Information comes from HCM Payroll.

  • Fixed Asset: Information comes from Asset Management.

To generate the obligatory accounting audit files, PeopleSoft provides businesses that use PeopleSoft Financials applications with:

  • Setup components.

    PeopleSoft setup pages enable users to define CNAO-specific information and rules and to provide mapping between existing PeopleSoft data and CNAO-required data.

  • Application Engine processes.

    Run control pages initiate processing that extracts data from source tables, performs required calculations or data manipulations, and inserts that data into staging tables.

  • Data Export Import Utility (DEIU).

    This mapping utility facilitates the import of financial report files in CSV format (PS/nVision reports for Balance Sheet, Income Statement, and Equity Change Statement) into staging tables.

  • DEIU processes.

    Using DEIU, a set of processes retrieves the data from the staging and other source tables and inserts the data into the required XML audit files.

  • Translation processes.

    This processing translates the English XML tags in the files into Chinese XML tags.