10 + 100 = Accounting Competition

Related entries: Business Issues, Corporate News, General, News, Services

A plan to develop “national champions” that could challenge the dominance of the Big Four international (i.e. foreign) accounting firms in China was reported here in June. Now it is reported (by Forbes and the FT) that a draft policy paper has been released by the Chinese Institute of Chartered Accountants (CICPA), and that the aim is to:

    “develop at least 10 accountancy firms capable of comprehensive, international standards of service within the next decade in order to reduce its reliance on foreign groups”.

The report also notes that another 100 big firms will be needed to serve the needs of large local companies. In addition to keeping more business at home, it is also hoped that this move will help to consolidate the accounting sector, and to improve standards in corporate accounting. The current problem stems from the fact that:

    “The big four international accountancy firms KPMG, PwC, Deloitte and Ernst & Young presently monopolise the auditing of Chinese companies listed overseas. Only 70 of China’s 5,600-odd accounting firms are authorised to audit listed companies.”

While there are hints of protectionism in this move, it is good to see that China is seeking to develop strength from within, rather than simply using blunt policy tools (currently being used on some foreign investment) to keep strong foreign players out (though a few of those may appear in due course). It is also a positive thing for the sector (like so many in China) to be consolidating.

The question remains…who will do the accounting for the inevitable round of accounting M&As?

See news source:

Leave a Reply

You must be logged in to post a comment.