All this in a draft policy paper recently released for industry comment by the Chinese Institute of Chartered Accountants (CICPA). Concerns abound that any weakness in domestic accounting infrastructure and issues with reliability of corporate accounts may impede effective formation of deep capital markets. Currently the Big 4 firms dominate the Chinese companies listed overseas, and only about 70 of China's more than 5,000 accounting firms are even permitted to audit listed companies.
"Any problems encountered . . . must be promptly and effectively resolved," the policy says. Further, it shows up the lack of experienced accountants and issues a need for for the development of 1,000 "senior professionals able to handle globalised services".
Tax Services grew only 6% "against a background of continuing regulatory and legislative reform". This is surprising as Tax has always been a strong growth leader and reflects the challenges and fallouts from the ongoing KPMG litigation on use of inappropriate tax shelters.
Another example of how the Chinese government is setting policy, deciding industry structure and dictating how the market should behave. It has been very successful in other sectors, so we would expect full compliance in the accounting area too. If this were to materialize, the Big4 are going to have a tough run for their Remimbi in the future.
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