Accounting industry emerging from 'chaos'
CHINA'S accounting industry has moved a step closer to standardisation with the awarding of permission certificates to three joint-venture accounting firms for auditing shareholding-structured enterprises.
China-based joint ventures receiving the certificates are Ernst and Young, Arthur Andersen and KPMG Peat Marwick.
Such permissions are given to all qualified accounting firms in China and not limited to joint ventures.
However, it was not previously made clear to the three joint ventures whether they were allowed to undertake the task, while some assumed they could.
Ernst and Young senior manager Chan Yuen-tao said the move indicated an effort by the Chinese government to systematise the profession, which many practitioners have found chaotic.
''The industry was not much looked after by the state. But when a lack of standardisation [in quality] was observed, the country would try to put it right,'' Mr Chan said.
KPMG Peat Marwick partner Walter Kwawk Deh-ming said its joint venture would now start auditing shareholding-structured enterprises, which formed a potentially large client base.
''The demand for this area is great. So many state-owned companies are being converted to shareholding structures with a view to float,'' said Mr Kwawk.
Mr Chan noted that China's move towards a market economy would result in an even greater number of mainland companies seeking flotations either in local or overseas exchanges.
But he added there was also very keen competition from domestic accounting firms which charged lower fees.
''Their labour costs are low. They can survive offering cheap service.'' said Mr Chan.