China introduces spot checks for IPOs

China’s security regulator plans to tell underwriters and auditors of prospective IPO applicants to review their accounts and then begin conducting spot checks on the companies, Reuters reported, citing unidentified sources. The China Securities Regulatory Commission (CSRC) will be on the lookout for factors including illegal and fraudulent activity and measures taken to prevent loss, the sources said Wednesday. The regulator also plans reject IPO applicants for China’s small-cap ChiNext board if they record a year-on-year decrease in profit in 2012. The self-inspection period will continue until the end of March. The move adds to other measures taken by the CSRC to improve the reputation of the Chinese stock market, after it was tarnished by allegations of insider trading and accounting scandals. New listings on the domestic IPO market have been frozen since October, and 882 companies are now queuing to list.