Solution:
Dear, sir
I am writing to explain whether LanzhouDatan CPA firm and Shanghai Yangming CPA firm can respectively provide the valuation and internal control services to Huimin Energy company and Xinxing Solar Energy, and how the new Code of Ethics impacts on the partner rotation requirements for the Zhanglong Energy audit. Some relevant concepts are as follows:
If a firm is deemed to be a network firm, the firm shall be independent of the audit clients of the other firms within the network.
A network firm is a firm or entity that belongs to a network, which is a larger structure: (a)that is aimed at co-operation; and (b) that is clearly aimed at profit or cost sharing or shares common ownership, control or management, common quality control policies and procedures, common business strategy, the use of a common brand-name; or a significant part of profession of resources.