The start of a new year tends to be a hectic time for foreign companies in China. During this period, businesses must also begin to prepare their annual statutory audit – if they have not started to do so already. The answer to limiting exposure to these risks is internal control. In this issue of China Briefing magazine, we walk foreign businesses through the annual audit and compliance process from start to finish. We begin by answering the common questions that foreign investors ask about annual audit in China, before offering a comprehensive step-by-step guide to completing the process. Finally, we offer six recommendations for businesses to better conduct annual audit and make the most out of the opportunity.